Elon Musk Could Help Oklo's Stock Price Soar. Here's Why.

Recent comments from Elon Musk, the CEO of Space Exploration Technologies (NASDAQ: SPCX), may inadvertently help the stock price of Oklo (NYSE: OKLO), a nuclear energy developer that doesn't appear to have any direct connection to space or AI -- at least at first glance.

During SpaceX's first investor call on Aug. 11, Musk stressed to investors how much energy the company will need to scale its AI compute infrastructure.

"[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. So, assuming that maybe one-fourth of the projects take longer than expected."

For comparison, New York City consumes roughly 10 gigawatts of power at peak energy demand during a summer heat wave. SpaceX, therefore, expects to soon need more power on a daily basis than the largest city in America.

Massive amounts of new energy will be needed to power an unprecedented global expansion of data infrastructure over the coming decades. With a nuclear energy system designed specifically with AI data centers in mind, Oklo is uniquely positioned to benefit. And there's a chance that Musk's recent comments will help spur an arms race for energy that ends up with Oklo being acquired.

AI investors should expect an arms race for energy

To power its data center build-out, SpaceX has relied on a wide variety of energy sources -- everything from wind and solar to natural gas. Other AI companies, however, have invested much more aggressively in nuclear. Alphabet and Microsoft, for example, have both committed to massive nuclear projects, from building new facilities to restarting old systems.

The arms race for energy is widely understood by industry experts, but it's still in its early innings. Small modular reactors (SMRs) -- essentially miniature, scalable nuclear power plants that can be built quickly and colocated with data center infrastructure -- should face unprecedented demand. By designing SMR systems with data center customers in mind, Oklo stands to directly benefit.

Image source: Getty Images.

So far, Oklo has focused on selling its systems to data center companies. In January, for example, Meta Platforms agreed to a 1.2 gigawatt SMR system. But as the energy arms race heats up, and SMR systems are increasingly validated, I wouldn't be surprised to see an AI company outright acquire Oklo to ensure it can scale as quickly as possible.

The allure of Oklo's systems to AI companies has already been made clear. Sam Altman, the CEO of Open AI -- one of the largest AI companies on the planet -- invested early in Oklo. "Oklo has extremely strong customer interest," Altman previously revealed. "There's no lack of desire or need for this."

I don't expect Oklo to be acquired anytime soon. But I wouldn't be surprised to see it happen if the company can prove its designs in real-world applications. AI companies will be that desperate to secure and control new energy sources.

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