NuScale Power Is on Sale. Could This Be the Buy That Sets You Up for Life?

NuScale Power (NYSE: SMR) is an ambitious nuclear energy company at the forefront of a potential nuclear renaissance. In a world hungry for clean energy -- hungry for energy, period -- NuScale has a tremendous opportunity to solidify its lead in the development of small modular reactor (SMR) technology.

Yet despite being near the center of a multitrillion-dollar market opportunity for nuclear power -- an opportunity driven by artificial intelligence (AI), cloud computing, data center construction, and wider electrification efforts -- NuScale also faces challenges. The company is still reporting losses -- a net loss of about $44 million in the first quarter -- and hasn't yet seen its technology deployed in the real world. Soon, its potential market could also get crowded with similar companies competing for the same business, like Oklo.

The stock has taken a dive lately, falling over 75% from its recent all-time high. It's the only nuclear company in the U.S. with approval from the Nuclear Regulatory Commission (NRC) to deploy SMR technology for commercial use, but is that first-mover advantage enough to make this nuclear energy stock a long-term buy?

First-mover advantage, commercial growing pains

NuScale Power sits at the intersection of two powerful trends in energy: first, the global push for clean energy; and second, the rapid construction of AI infrastructure, including data centers, whose power needs in some areas largely surpass the capacity of local grids.

Electricity generated from nuclear energy does not emit carbon dioxide, at least not directly. But given the pace at which AI infrastructure is moving, the typical huge nuclear plant simply takes too long to construct. It can take a decade or longer to build a conventional nuclear power plant. A hyperscaler's data center, on the other hand, can take 12 to 36 months.

Image source: Getty Images.

Which brings us back to NuScale. NuScale's reactors are smaller than traditional nuclear power plants and should take less time to deploy. The company says so itself: On its website, it claims its SMR technology can be operational in 36 months. With thousands of data centers being planned or built across the U.S., NuScale's SMR technology seems ripe for a breakout.

And yet, the company hasn't yet inked a sale of its technology.

One reason for this could be related to costs. Nuclear engineering is notorious for cost inflation, and a new technology such as NuScale's likely requires components and parts that can't be manufactured at scale. This was one of the reasons its project in Idaho was canceled in 2023, as costs were getting out of hand.

NuScale isn't completely up a creek without a paddle. It has two projects in different phases of planning, one in Romania, and another with the Tennessee Valley Authority. It has also entered a binding partnership with ENTRA1 Energy, a private energy development company, which will handle the development, financing, and operation of NuScale's SMR plants.

Could NuScale Power set you up for life?

If NuScale eventually becomes the default provider of SMR technology, today's investors could notch a substantial gain over the long run. But NuScale is a speculative stock, and there's no guarantee its technology will be adopted. Expect this stock to trade on sentiment in the near term -- possibly dipping lower than today's price -- until clearer revenue streams open up.

Steven Porrello has positions in NuScale Power and Oklo. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.