Prediction: SpaceX's Power Needs Will Turn It Into Oklo's Biggest Customer

Space Exploration Technologies (NASDAQ: SPCX) CEO Elon Musk just reminded investors that energy will be a big problem for the future of artificial intelligence.

When the space company reported its first earnings on Aug. 11, Musk spent several minutes stressing how much power the company will need to support its AI data infrastructure investments.

"[O]ur tentative target is to actually have 20 gigawatts at the power and cooling level online by the end of next year," Musk revealed. "Now I don't think we're going to achieve 20 gigawatts, but we want to have a series of projects that cumulatively come to 20 gigawatts by the end of next year. Some of them won't pan out exactly on time, but I would expect that we still probably have at the power plant level, something close to 15 gigawatts."

All of this is good news for Oklo Inc. (NYSE: OKLO): one of the most popular nuclear energy stocks on the market today.

Image source: Getty Images.

Oklo could become a major SpaceX customer

Many AI investors are currently focused on the race to secure graphics processing units (GPUs). Musk, however, is equally concerned with getting new energy sources online to power the new compute infrastructure. "[O]ur goal is to have far more power, cooling, and electrical equipment than we have GPUs," he said.

SpaceX has invested heavily in bringing new power sources online, including everything from large utility-scale battery systems to conventional natural gas. Nuclear power, however, remains one of the most promising long-term solutions thanks to its low-carbon and reliable baseload characteristics.

Oklo is arguably leading the charge to power AI data centers with nuclear energy thanks to its small modular reactor (SMR) designs. SMRs are essentially miniature nuclear power plants that can be built more quickly and at a lower up-front cost than conventional nuclear power plants.

Once scaled, SMR systems are expected to have deployment times of one to three years, though some aggressive estimates suggest it could be faster. Compare that to a decade or longer for a traditional nuclear power plant, and you quickly get an idea of how SMRs can better meet AI's near-term demands for energy.

Only two SMR systems are currently in commercial operation worldwide. Oklo doesn't even have U.S. regulatory approval to build an SMR system yet. Plus, competition is heavy, with deep-pocketed industrial conglomerates pursuing their own designs.

But Oklo's systems are designed specifically with data centers in mind, the same type of infrastructure SpaceX is racing to build. Oklo's systems are so tailored for data center adoption that Sam Altman, the CEO of OpenAI, was an early investor in the company. In fact, this is the biggest reason why SpaceX might not adopt Oklo's technology, as Elon Musk and Altman have frequently squabbled in public.

SpaceX might become Oklo's biggest customer. Or another AI company, such as Meta Platforms, which has already signed a deal with Oklo, could emerge as its most valuable partner. In either case, expect Oklo to play a key role in supplying power to the AI industry over the next decade and beyond.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.