Is Oklo Stock a No-Brainer Buy at Less Than $50?

Oklo (NYSE: OKLO) isn't in the tech sector, but its performance hasn't been too different from that of many artificial intelligence (AI) stocks. While it's an energy company, its growth story centers heavily on its small, modular reactors that can be placed near data centers, providing them with clean energy. As tech companies invest in data centers, the excitement spills over into Oklo and other energy stocks.

This year, amid rising apprehension about AI stocks and excessive capital expenditures, Oklo's stock has seen a significant sell-off. Part of it may be valuation, while another factor may just be a lack of confidence in what the long term may hold for the energy stock.

But with energy needs still likely to remain high due to AI, and the stock trading below $50, is now a good time to buy Oklo?

Image source: Getty Images.

The growth potential is there, but Oklo's success isn't a sure thing

The expectation is that Oklo's first Aurora powerhouse will be up and running by late next year, or perhaps 2028. But regardless of when it happens, there are still considerable question marks around the business, and how strong its financials might be when everything is operational.

Right now, the company is generating no revenue and incurring heavy losses. In a few years, it might be generating some revenue and posting even heavier losses. Oklo is in a capital-intensive industry, where it can take a long time to build reactors and may also be costly to run and maintain them. Without a clear picture of what its margins might look like, investors are taking on considerable risk with the nuclear energy stock, because at this stage it's unclear when it might achieve profitability, assuming it can do so at all.

Oklo's stock may be less expensive, but it's still not a deal

At around $7.5 billion in market cap, Oklo may be less valuable than it was a year ago, but that doesn't mean it's less likely to incur losses for investors who buy today. It's simply a sign of how much more grossly overvalued it was at its peak; at one point, its valuation topped $27 billion -- all based on a promising growth story.

Oklo is a stock I'd watch to see how its business evolves, but as of now, I think it's too early to invest, especially given that its valuation doesn't offer investors any real margin for safety.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.