What Is One of the Best AI Energy Stocks to Hold for the Next 5 Years?
Key Points
Oklo is a nuclear energy start-up designing a small, compact reactor.
Its reactors are small enough to be assembled near data centers.
The company is pre-revenue, and it's moving through the regulatory process to operate commercially.
- 10 stocks we like better than Oklo ›
Not everyone will understand how artificial intelligence (AI) works. But one thing that is becoming clear is the staggering amount of energy it will need to operate.
According to S&P Global Market Intelligence, power demand for artificial intelligence is set to increase tenfold by 2030. Meanwhile, the International Energy Agency predicts that data center electricity consumption will also double by the same year.
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The high-density computing and data center loads driven AI could be alleviated slightly by some material factors, like more efficient chips or cooling systems. However, it's likely the world will need more energy -- and the capacity to generate it -- to keep pace with AI.
One energy company that could fit this role in the future is Oklo (NYSE: OKLO). Here's why.
Image source: Getty Images.
How Oklo could power the AI age
Oklo is a next-generation nuclear company that's aiming to build small, modular reactors. These reactors -- which it calls powerhouses -- will be compact enough to power data centers directly. They can also provide reliable 24/7 power to keep them humming at all hours.
The company's lead reactor design, Aurora, is being engineered to run continuously for a decade or more without refueling. That's about 5 times more than traditional water cooling reactors in operation today.
Oklo's reactors range up to 75 million megawatts of electricity -- plenty to power most midsize facilities. Its powerhouse can also be assembled in less time than a traditional reactor, which fits with the fast-paced development of AI.
Enthusiasm for Oklo's energy potential has sent the stock soaring over 300% on the year. That same hype has also made Oklo extremely volatile, at times seeing double-digit losses in a single trading session.
Oklo is still pre-revenue, and it doesn't have the regulatory approval to build or operate reactors at a commercial level. Until it secures that license, it will rely on its cash reserve, which was a sizable $410 million as of last quarter.
Because of its volatility I wouldn't recommend Oklo if you're squeamish. However, for long-term investors, adding shares of this nuclear stock could prove unusually rewarding.
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Steven Porrello has positions in Oklo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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