Everyone's Watching Oklo and NuScale for Nuclear Exposure. This Overlooked Stock Is Building One Too.

The AI-driven nuclear power resurgence has been one of the hottest storylines over the past year. It has driven significant interest in nuclear energy stocks. Nuclear names like Oklo (NYSE: OKLO) and NuScale (NYSE: SMR) have been hot commodities as investors buy into the hype that these promising companies can cash in on the nuclear power megatrend.

However, while all eyes have been on Oklo and NuScale, investors might be overlooking another company that's also building a small modular reactor (SMR): GE Vernova (NYSE: GEV). While more known for its leading gas turbine and wind energy business, the massive power equipment maker is becoming an underappreciated nuclear energy name to watch.

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GE Vernova's nuclear-powered upside

GE Vernova already has an established nuclear power services business. During the second quarter, the company noted that power service orders rose 12%, driven by nuclear and gas power. The company also highlighted that its services revenue increased, due again to both nuclear and gas power.

The company is also investing in nuclear power for the long-term. CEO Scott Strazik highlighted this on the second-quarter call when discussing the company's long-term investments. He noted that, on nuclear, "we continue advancing the SMR for industrialization at scale, as evidenced by our progress on the existing project underway in Ontario." That project (using GVH's BWRX-300 design) is already under construction, with completion expected by the end of the decade. Once finished, it will be the first grid-scale SMR in the Western world, putting GE Vernova ahead of both Oklo and NuScale. Additionally, the CEO noted that in the second quarter, the company "secured two more tech selects in early work agreements for our SMR in the U.S.," potentially positioning it for greater nuclear-powered growth.

It has since launched the next phase of what could become its next nuclear project. In mid-August, GE Vernova Hitachi Nuclear Energy (GVH) and Blue Energy signed an agreement to advance their collaboration to deploy a 2.5-gigawatt (GW) gas-plus-nuclear power plant in Texas. The project would deploy both GE Vernova 7HA.02 gas turbines and GVH BWRX-300 SMRs, subject to a final investment decision that could come in 2027. The project would initially power a 1 GW data center nearby using two GE Vernova gas turbines, and then add another 1.5 GW of nuclear capacity from up to five GVH SMRs, starting in 2032. The companies believe it could serve as a blueprint for deploying reliable baseload power at scale and speed.

GE Vernova: The lower-risk nuclear upside play

GE Vernova doesn't get much discussion in the nuclear power story because it's not a pure-play on the trend. Gas is by far its most dominate business these days. Its gas power equipment backlog grew from 100 GW to 116 GW in the second quarter and is on track to reach 125 GW by year-end. Meanwhile, even though its wind business is struggling (with a 40% drop in orders and a 10% revenue decline in the second quarter), GE Vernova has the largest installed base of onshore wind turbines in the U.S.

However, while that makes it an overlooked nuclear play, it also helps significantly de-risk it as a nuclear energy investment. GE Vernova's legacy gas and wind businesses, which are benefiting from the same AI power megatrend as Oklo and NuScale, generate significant revenue and cash flow. Its revenue grew 22% in the second quarter to $11.1 billion, while it produced $5.5 billion in cash from operating activities. That enabled GE Vernova to build its cash balance to $13.1 billion while returning $3.9 billion to shareholders through dividends and repurchases this year. This strong financial profile provides ample funding for long-term SMR investments.

Contrast that with Oklo and NuScale. Oklo generated a mere $1.2 million in revenue during the second quarter, compared to zero in the prior quarter and the prior year. That compares to a net loss of $48.4 million. On a more positive note, it has around $2.5 billion in cash and investments, providing liquidity to fund its operations and SMR investments for a while. Meanwhile, NuScale is in a similar financial position. It generated only $75,000 in revenue during the second quarter (down from $8 million in the year-ago period) and posted a $47.5 million net loss. Though it, too, has a liquidity buffer ($1.9 billion) to help fund its operations and SMR investments for a while.

Look beyond the obvious names

Oklo and NuScale have received significant investor attention over the past year because they're pure-play SMR technology companies. That's causing investors to overlook the embedded SMR upside quietly building within GE Vernova. Unlike SMR start-ups Oklo and NuScale, GE Vernova is generating strong, growing revenues and cash flow, giving it the financial fortitude to make long-term SMR investments that could deliver a big payoff for shareholders in the coming years.

Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Vernova. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.