NuScale Power Stock Is Impossible to Ignore Right Now. Here's What to Do With It.

It's hard to know what to make of NuScale Power (NYSE: SMR) stock at the moment.

On one hand, the company has access to some of the biggest growth tailwinds the market currently offers. The company has the potential to directly benefit from the rapid rise of artificial intelligence (AI) technologies. Its nuclear technology is an ideal fit for meeting the growing energy demands of data center infrastructure, which are vital to executing AI operations. Without added power supply, the AI industry will have trouble growing. NuScale Power's management team understands this dilemma and has positioned the company to benefit.

Here's the other hand: NuScale has yet to successfully build and commercialize any of its nuclear-powered small modular reactors (SMRs). While the company has received critical regulatory approvals that allow it to begin construction, its business model is still largely theoretical. The same issue exists for demand -- there's clear interest as demonstrated by NuScale's project pipeline, but the company has faced repeated hurdles in actually financing and constructing these projects.

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NuScale's market cap is now below $4 billion -- a far cry from the multitrillion-dollar opportunity it's chasing. But risks abound. Is it worth investing in this high-risk, high-reward stock? The answer depends on one factor.

Here's how to decide whether to invest in NuScale Power

When considering an investment in NuScale, one critical factor should influence your decision: the timeline.

NuScale already has approved SMR designs. It also has large projects both domestically and abroad that have received some level of government approval. The biggest hurdle to getting these projects underway right now relates to financing. The company's project in Romania, for example, is expected to cost between $6 billion and $7 billion, with the Romanian prime minister repeatedly cautioning that it could take some time to secure financing. And while ENTRA1 -- NuScale's execution partner for its massive 6-gigawatt project for the Tennessee Valley Authority (TVA) in the U.S. -- has secured $25 billion in government funding, it's still unclear when or how this funding will flow to the NuScale TVA project.

Let's assume that funding is secured relatively soon. It may still take until 2030 or beyond to actually get these projects constructed and producing power at scale. In the meantime, NuScale won't be generating revenue, meaning it will need to rely on debt, government subsidies, and large amounts of shareholder dilution to stay afloat.

NuScale stock isn't for the conservative investor. There will be extreme volatility over what needs to be a very long holding period. So while the upside potential is clearly there, investors must remain patient and willing to put more capital to work during the inevitable dips.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.