Oklo and NuScale Power Have Shed a Combined 85.3% This Year. Why Are Nuclear Stocks Falling?

It has been a tough year for Oklo (NYSE: OKLO) and NuScale Power (NYSE: SMR). Shares of these nuclear power stocks have fallen by roughly 44% and 41%, respectively.

It's strange to see nuclear energy stocks with such promising long-term growth potential struggle in this market. Demand from the artificial intelligence (AI) sector for more energy has caused analysts to predict a nuclear renaissance. Bank of America values the upcoming nuclear opportunity at a staggering $10 trillion.

Why, then, are Oklo and NuScale struggling? There are three key reasons.

Here's why Oklo and NuScale Power shares are struggling

The main reason Oklo and NuScale shares are struggling isn't the promise of nuclear energy. Instead, shares are struggling simply due to shifts in investors' risk appetite.

Both Oklo and NuScale specialize in small modular reactors, or SMRs. These miniature nuclear power stations can be built quickly, but only two SMR systems have ever been commercialized worldwide. And both Oklo and NuScale are likely years away from commercializing their own systems. Oklo isn't even approved by regulators to begin construction.

With cash flows not expected until far into the future, even small shifts in market risk tolerance will have an undue impact on each company's stock price.

Image source: Getty Images.

The second reason shares are struggling is related to these distant cash flows. Without any revenue-generating projects, Oklo and NuScale continue to post losses each quarter. Bank of America does not see real-world SMR adoption ticking up until 2030 at the earliest, with meaningful adoption not expected until 2035 or 2040. This reality has historically forced ongoing shareholder dilution, and will likely continue to do so. Without firm financial commitments from customers, the market seemingly has grown worried about each company's financial position. It's not that these companies will go bankrupt anytime soon. But shareholder dilution may be greater than many investors expected at the start of 2026, with long-term insolvency risk a growing consideration.

Finally, shares of both Oklo and NuScale may simply have been overpriced at the start of the year. Oklo's market cap hovered around $20 billion in January, with NuScale coming in around $10 billion. Excitement around SMRs and AI caused a market fervor for nuclear power stocks. But those valuations were likely too rich for money-losing businesses with meaningful cash flows not expected until the distant future.

NuScale and Oklo remain promising businesses. But perhaps today's valuations are closer to what investors should have demanded in the first place.

Bank of America is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.