Wedbush Securities initiated coverage on Thursday of Oklo — the nuclear power startup backed by OpenAI head Sam Altman — with an outperform rating. The new rating comes a day after the company announced an agreement to provide as much as 12 gigawatts of energy to Switch, an AI provider and data center operator.
Wedbush Securities analyst Dan Ives on Thursday handed Oklo stock a price target of 26 along with the outperform rating, with data center demand looming large as part of the company's potential "growth story."
"With the AI revolution underway, the industry will need roughly a tenfold increase in computing power by 2030 which takes up a tremendous amount of energy," Ives wrote. "Hyperscalers, data centers, and the U.S. Government are turning to SMRs (small modular reactors) and nuclear technology for clean energy and we believe Oklo is in an optimal position to capitalize on this opportunity."
Meanwhile, the advanced nuclear technology company reported Wednesday it has signed a deal to supply 12 gigawatts worth of nuclear projects to Switch through 2044. Oklo currently expects its first Aurora powerhouse nuclear reactor to be operational by 2027.
Under the agreement, Oklo will develop, construct, and operate powerhouses to provide power to Switch across the U.S. through a series of power purchase agreements, the company said Wednesday.
There are currently no operational advanced nuclear projects. However, several companies are moving ahead with small modular reactors, or SMRs, technology. Analysts broadly view Oklo as the SMR-focused company that will come online first with others targeting the 2030s.
Oklo stock jumped 2.6% to 21.50 on Friday after soaring more than 14% during market trade on Thursday.
The stock gained 16% on the week but OKLO shares are down nearly 9% in December.
New Nuke Stocks Take Off
Despite the December decline, the Altman-backed Oklo has jumped about 100% in 2024 as nuclear energy-related stocks have rallied broadly following S&P 500 nuclear giant Constellation Energy's announcement on Sept. 20 of a two decade contract with Microsoft to provide nuclear power for the tech giant's data centers.
Since the Constellation Energy-Microsoft announcement, Oklo stock has surged more than 220%. However, the company forecasts a full-year operating loss of $40 million to $50 million.
Prior to the latest data center deal, Santa Clara, Calif.-based Oklo announced it recently received letters of intent and is partnering with "two major data center providers" to deliver up to 750 megawatts for "data centers across the U.S." Oklo says that with these deals its customer pipeline is approximately 2,100 megawatts at the end of Q3, up from 1,350 megawatts at the end of Q2 and 700 megawatts in July 2023.
Fellow SMR-focused stock Nano Nuclear Energy advanced nearly 3% while NuScale Power declined less than 1% on Thursday.
NNE shares have galloped around 380% higher since going public on the Nasdaq on May 8. Meanwhile, NuScale Power stock has surged about 500% in 2024, propelled higher by more than 50% gains in October and November.
AI And Nuclear Energy
Nuclear energy saw a comeback in 2024, with nuclear power and utility stocks running higher, fueled by the immense energy demand for artificial intelligence, and the data centers powerful enough to allow them to "train" themselves.
In the U.S., McKinsey & Co. projects that data center energy demand will grow from around 4% currently, as a percentage of total energy demand, to 11%-12% by 2030.
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Meanwhile, a Grid Strategies report released in early December pegs U.S. electricity demand growing around 16% in the next five years, with about 128 gigawatts of new capacity needed to come online by 2029. Grid Strategies previously predicted a 39-gigawatt demand increase.
Now, many technology companies are investing in or partnering with nuclear power providers to ensure energy supplies for their data centers.
Nuclear Deals
In September and October, Amazon.com, Alphabet and Oracle all announced decisions to invest in developing SMR technology.
In early December, Meta Platforms announced plans to have a $10 billion artificial intelligence data center built in northeast Louisiana. The project will be Meta's largest data center, according to the Facebook-parent. Prior to the deal, Meta published a request for proposals for nuclear energy developers to provide one to four gigawatts of new nuclear generation capacity by the early 2030s.
"We believe that nuclear energy can help provide firm, baseload power to support the growth needs of the electric grids that power both our data centers (the physical infrastructure on which Meta's platforms operate) as well as the communities around them," Meta said in a blog post.
Please follow Kit Norton on X @KitNorton for more coverage.
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