You May Have Never Heard of This Company, But Its Stock Is Up Over 320% Year to Date

Key Points

• Nuclear energy startup Oklo has climbed over 320% on the year (at the time of writing).

• Investors are excited by the company's Aurora powerhouse and fuel recycling plans.

• The company is pre-revenue and hasn't gotten regulatory approval to operate a nuclear reactor commercially.

• 10 stocks we like better than Oklo ›

When you think of stock market winners over the last three years, artificial intelligence (AI) stocks probably jump to mind. NVIDIA, for instance, has climbed around 1,085% since the start of 2023 to the time of writing, while analytics software winner Palantir soared above 2,500% over the same period.

While both are impressive runs, one pre-revenue startup has shot up 1,383% year over year. It's not an AI stock, though, to be sure, it is riding some AI tailwinds. Instead, it's the advanced nuclear company Oklo (NYSE: OKLO).

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Image source: Getty Images.

When a nuclear energy stock climbs over 320% on the year, it's sure to turn some heads. But whether Oklo is worth adding to your portfolio or not will depend on a few things -- and your belief in a future of nuclear energy is only the beginning.

What Oklo does

Oklo is building what it calls "Aurora" powerhouses. These small, factory-built nuclear reactors are designed to run on high-assay low-enriched uranium (HALEU), a type of fuel that lasts longer than the lower enrichments used in traditional light-water reactors today.

How much longer are we talking? Well, to give you an idea: Oklo expects its Aurora powerhouses to run for a decade or more without refueling. Many of today's nuclear power plants are refueled every 18 to 24 months. At that rate, a light-water reactor would need to be refueled five times before Oklo's Aurora is refueled once.

In addition to power generation, Oklo is also expanding into nuclear fuel recycling. The expectation is that Oklo will convert used nuclear fuel into new reactor fuel, potentially saving up to 80% of the company's fuel costs, according to Oklo's estimates. In line with this plan, Oklo recently announced that it was building the U.S.'s first privately funded nuclear fuel recycling facility in Oak Ridge, Tennessee, an estimated $1.68 billion project that could boost Oklo's fuel security when it's finished in the early 2030s.

Why investors are excited

To be sure, Oklo's advanced technology alone isn't what's exciting investors. It's the potential for this technology to power an energy-hungry future.

Electricity demand in the U.S. is expected to grow 3.2% annually through 2030 and 2.2% annually through 2050 (from 2023 levels), according to ICF. At that rate, U.S. installed generation capacity needs to grow 3.3% every year between 2025 and 2050. Considering that this capacity only grew 1.8% over the last 25 years, it's clear we'll need more than the traditional blend of power generation to keep up.

Of course, that doesn't mean advanced nuclear power will be the supply solution to surging demand. A plethora of sources (solar, wind, geothermal, hydro) will likely be needed. But advanced nuclear could become optimal for a major part of that future demand, particularly the around-the-clock needs created by AI and data centers.

And this, finally, is where Oklo is expected to shine. AI data centers will need 24/7, clean power, and Oklo's Aurora powerhouse is small and modular enough to be assembled nearby to give it to them. Partnerships with Switch and Equinix, two big names in AI data infrastructure, underscores Oklo's appeal to some of the sector's heaviest power users.

An untested concept and cash burn

Here's a quick reality check on Oklo. Although it has big ideas and potential, it doesn't have a commercially available product. Its expected cash burn for 2025 will be between $65 to $80 million And since it's not generating revenue, it'll rely on its cash and cash-equivalent securities, which were a little less than $227 million at the end of June.

What's worse, Oklo could be at least two years away from generating any meaningful revenue, with its first operational reactor not expected until late 2027. A big reason for this is that it needs the blessing of the Nuclear Regulatory Commission (NRC) to start deploying its design in the U.S. While Oklo is working through the process to obtain that license, there's not a clear date for when it will have one.

Toss in the fact that Oklo's rival, NuScale, already has a Standard Design Approval (SDA) for two of its small modular reactor (SMR) designs, and the clock ticking down resounds a little bit louder.

Until Oklo has a license for its Aurora design, its advanced nuclear technology will remain untested at scale. Given that its market cap is nearing $14 billion, and with no revenue to show for it, this stock remains a speculative play for aggressive growth investors.

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Steven Porrello has positions in Nvidia. The Motley Fool has positions in and recommends Equinix, Nvidia, and Palantir Technologies. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.