Why NuScale Power Stock Rocketed 23.7% Higher in June

Key Points

• Small modular reactor developer NuScale Power has seen its stock soar over the past two months.

• Political support for nuclear energy is merely one factor pushing the stock higher.

• While enthusiasm for nuclear energy stocks remains high, only investors comfortable with a high-risk investment should remain interested in NuScale Power.

After soaring 93% in May, some may have speculated that NuScale Power (NYSE: SMR) stock would have powered down in June and given back some of its gains.

But they would have been greatly mistaken. Thanks to growing political support for nuclear power and the company in talks regarding potential deals with data center developers, investors felt motivated to buy small modular reactor (SMR) developer NuScale Power. According to data provided by S&P Global Market Intelligence, NuScale Power stock rose 23.7% in June.

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Image source: Getty Images.

Orders out of Washington seek more nuclear -- and investors were listening

Some of the enthusiasm behind NuScale Power's stock early in the month can be attributed to President Donald Trump's executive orders from May 23 meant to reinvigorate growth in the nuclear energy industry. Specifically, the orders intend to spur expeditious installation of "advanced nuclear technologies to support national security objectives, including powering artificial intelligence (AI) computing infrastructure and national security installations."

The Nuclear Regulatory Commission's approval of a second design for the company's SMR represented another catalyst for the stock's rise in late May. NuScale Power proclaims itself as the only SMR company with approval from the Nuclear Regulatory Commission. With the approval in late May, two designs are now approved: a 50 megawatt power module and a 77 megawatt power module.

Bulls continued the buying activity early in the month upon learning of the company's apparent progress toward inking a deal with a top hyperscaler customer. In speaking with Axios Pro on June 5, NuScale Power's CEO John Hopkins stated that the company is in talks with several "Tier 1" hyperscalers that are interested in purchasing power from the company.

Hyperscaler companies are making massive investments to support data centers that are specifically suited for AI -- and many are partnering with SMR companies. Alphabet, for example, signed a deal with SMR developer Kairos, while SMR developer Oklo inked deals with several data center developers last year as well.

Is it too late to power your portfolio with NuScale Power stock?

It's clear that enthusiasm for NuScale Power has been extraordinarily strong lately. What's not so clear, however, is whether the company will be able to fulfill its promise of helping to facilitate the nation's nuclear energy renaissance. The company is sure to experience some volatility as it continues its plight, so only investors with ample tolerance for risk should consider a position at this point. For those interested in a more conservative approach, a nuclear energy-focused exchange-traded fund may be a better choice.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.