This Nuclear Energy Trend Could Be Bigger Than Investors Think in 2026

Nuclear energy is being considered as a potential solution to the incredible demand for electricity created by artificial intelligence (AI) and the data centers it requires.

By 2028, according to the MIT Technology Review, data centers will consume almost the same amount of power as a quarter of American homes collectively. Companies like Microsoft and Alphabet are contracting directly with nuclear power companies like Constellation Energy and NextEra Energy to resurrect decommissioned nuclear plants to power their data centers.

But in the long term, small modular reactors (SMR) present one of the most intriguing solutions to the data center problem. These reactors usually work just like a conventional nuclear reactor, just on a far smaller scale.

A single one could be plopped into the middle of a cluster of AI data centers and provide electricity to them independent of the power grid. Now, there are currently no SMRs in operation but there are several companies working on them. And one of the best is BWX Technologies (NYSE: BWXT).

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From sea to land

BWX has been around since the 1950s when it designed and manufactured components for the world's first nuclear-powered submarine, the USS Nautilus.

Since then, it has built over 400 nuclear reactors for America's Navy. It has also produced over 325 nuclear steam reactors for reactors around the world.

Naval nuclear reactors, particularly those on submarines, need to be smaller than the ones you'll find on land, so BWX has considerable expertise in making nuclear power work in a confined space.

And the company brings that expertise to bear in the BWXT Advanced Nuclear Reactor or BANR.

The BANR is a factory-built nuclear power plant. It can be built in parts and then shipped out to its final location where it's assembled. And BWXT claims that once it's up and running, the BANR will be able to produce 75 megawatts of power through its high-temperature gas reactor.

And the BANR could be put into use for far more than just data centers, although BWX cites them as one of its chief use cases. Remote mines or oil and gas operations, small municipalities, and even college campuses could also be potential uses for SMR technology.

Playing it safe

What makes BWX particularly attractive as an SMR company is that it does things aside from developing SMR technology.

Many of the companies operating in that space like NuScale or Oklo are essentially start-ups and very reliant on investor dollars. But BWX can participate in the SMR industry while generating its own revenue stream and that makes it a far safer bet on SMRs than its competitors. Just take a look at BWX's latest results.

For 2025, the company generated revenue of $3.1 billion, up 18% over 2024. Meanwhile, Oklo generated no revenue whatsoever last year. Nor is it likely to until 2027.

BWX also saw its earnings per share (EPS) for 2025 climb 20% over 2024 and its net profit margin sits at 10.31%. Nuscale might generate a bit more revenue than Oklo but it's very far from profitable.

That makes BWX one of the safest ways to play the SMR trend, which is still in its early stages this year. This means most of its potential gains are still ahead for companies working on the technology.

James Hires has positions in Alphabet and BWX Technologies. The Motley Fool has positions in and recommends Alphabet, BWX Technologies, Constellation Energy, Microsoft, and NextEra Energy. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.