Potentially Turning a $10,000 Investment in NuScale Power into a Million Dollars?
You likely understand that nuclear power has been proposed as a swift, eco-friendly remedy to the world's energy shortage caused by increasingly energy-demanding AI data centers. You might also be aware of NuScale Power (SMR -0.20%), one of the few organizations close to delivering a solution soon.
However, it's still unclear whether nuclear power will truly materialize as the go-to answer to the planet's energy deficiency, and if it does, whether NuScale will contribute significantly.
If things go as some anticipate, a few investors may become wealthy.
Nuclear power gets a second chance
Despite its controversial history, nuclear power is seeing a resurgence. The World Nuclear Association reports that more new nuclear power plants have been activated over the past 20 years than have been decommissioned. Indeed, one of the shuttered reactors at Pennsylvania's famed Three Mile Island is expected to resume production in 2028, primarily to power an artificial data center operated by Microsoft.
In line with this, the International Atomic Energy Agency (IAEA) believes the world could be using up to double the current amount of nuclear power by 2050.
The technology is evolving, though. It's becoming safer and more cost-effective due to the rise of small modular reactors (SMRs) that can be installed and operated where power is needed. Desalination plants, steel smelting facilities, and the production of hydrogen for fuel cells are just a few reasons on-site nuclear power makes sense.
According to the IAEA, SMRs could account for around one-fourth of the nuclear power production capacity added over the next 25 years. Separately, market research firm Straits Research predicts the SMR market will grow at an average annual rate of over 9% between now and 2032, even before the technology is fully refined and before many customers are ready to try this less-proven concept. After that, IDTechEx expects the global SMR market's growth to accelerate to an annualized rate of 30% through 2043 when the technology is more proven.
At best, NuScale's a mixed bag right now
Enter NuScale Power.
The company isn't profitable yet, with little revenue to speak of. The argument for investing in NuScale now primarily stems from the potential business it may do in the future.
Its potential is promising for a couple of reasons. One is that NuScale's small modular reactor design is the only one currently approved by the United States Nuclear Regulatory Commission.
While competitors are also pursuing approval for similar equipment, some will likely succeed. NuScale Power also has prospective customers while others are watching. Romania's Nuclearelectrica and RoPower Nuclear, for instance, are moving forward with plans to buy six NuScale modules at a price of a few billion dollars each versus the company's $2 billion market cap, making it an attractive proposition for potential investors.
On the other hand, there are concerns.
To date, NuScale Power hasn't sold any functioning SMRs. The design it wants to commercialize -- the one capable of generating 77 megawatts of power -- isn't expected to receive U.S. Nuclear Regulatory Commission approval until mid-year. Even then, constructing just one small modular reactor is a multi-year project.
The company has also faced setbacks. Mostly due to cost overruns, last year, the Utah Associated Municipal Power Systems ended a decade-long (and high-profile) effort to develop a nuclear power facility around NuScale's technology. The disappointing outcome casts doubt on the very concept and viability of SMRs.
Too much risk for most investors
There's the catch, of course.
As AI data centers have highlighted the demand for energy, SMRs have regained traction as potential solutions. If small-scale, on-site nuclear power plants become a reality, the demand could be significant for NuScale, potentially turning a modest investment today into a seven-figure fortune in the future. But that's a big "if." Many factors could disrupt NuScale's plans.
Moreover, while it's conceivable that a $10,000 investment in NuScale Power today could eventually make you a millionaire, the odds of that happening aren't high enough to justify such risk. An investment in this stock is a high-risk, high-reward gamble, with as much potential to turn into a loss as a windfall.
So, proceed with caution if you dare, keeping your investment small and closely monitoring it for as long as you hold it.
After all, there are certainly less risky, higher-odds millionaire-making opportunities out there that don't require as much vigilance.
In the context of the nuclear power resurgence and the potential growth of small modular reactors (SMRs), some investors might see an opportunity to finance NuScale Power, with the hope of profitability if the company's non-profit status changes and its SMR design gains regulatory approval and commercial success.
Given the uncertain future of SMRs and NuScale's current financial situation, investing in the company carries a significant risk, as the potential rewards might not outweigh the potential losses, making it more suitable for aggressive investors willing to monitor their investments closely.
