Why NuScale Power Stock Sank 8.7% Today

Shares of NuScale Power (NYSE: SMR) sank on Tuesday, finishing the day down 8.7%. The drop comes as the S&P 500 and Nasdaq Composite lost 0.2% and 0.9%, respectively.

The Wall Street Journal reported that Alphabet's Google has signed a major deal with a nuclear fusion company.

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Google is betting on future tech

Google has signed a multibillion-dollar deal with Commonwealth Fusion System (CFS), a nuclear fusion start-up backed by Bill Gates. The deal will see Google secure 200 megawatts from CFS's first plant in Virginia by the 2030s.

Nuclear fusion, in contrast to today's fission-based systems like those of NuScale, produces significantly more power and is safe and clean -- no spent nuclear material to dispose of and no risk of a meltdown. It has long been the holy grail of energy production but has so far eluded scientists. However, recent developments indicate it could be a reality in the next decade or so.

Image source: Getty Images.

It's a big if

Scientists have thought fusion technology was a decade or so away for decades. The investment from Google makes sense because of the upside, but you can bet that Google is hedging its bet with more realistic plans to meet its energy needs today and in the near future.

NuScale Power's small model reactors (SMRs) make a lot of sense to fill that need in the near term. That being said, the company is still developing the technology. If you have significant risk tolerance, NuScale could be a good addition, but know that the stock will likely see a lot of volatility and is currently extremely pricey.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.