Amazon Delving into the Nuclear Market
It was a day of seismic proportions for NuScale Power (NYSE: SMR) as news of Amazon (NASDAQ: AMZN) venturing into the world of small modular reactors (SMRs) sent shockwaves rippling across the market. Reports of Amazon’s interest in utilizing this type of reactor to cater to the energy demands of its ever-expanding data centers set the stage for the astounding surge in NuScale’s stock.
As the day progressed, the stock catapulted to unprecedented heights, registering a staggering 31.6% surge by midday. The ripple effect was felt throughout the market, as major investor Fluor (NYSE: FLR) experienced a 7.2% uptick in its shares.
Image source: Getty Images.
Expanding Horizons in the Nuclear Landscape
Amazon’s foray into nuclear energy was solidified through the signing of three agreements for nuclear energy projects. Although NuScale was not explicitly mentioned in any of these projects, the tech juggernaut expressed a keen interest in diversifying its energy sources to include nuclear power. This commitment materialized with Amazon backing three new agreements for nuclear energy projects, aiding in the establishment of novel SMRs.
Additionally, Amazon’s forward-thinking approach led to a substantial $500 million investment in X-energy, a potential rival to NuScale, alongside a collaborative agreement with Dominion Energy to explore the development of an SMR project.
While Amazon’s announcement did not directly impact NuScale Power, the company stands as the sole U.S. entity possessing an SMR design license from the Nuclear Regulatory Commission. NuScale faced setbacks in the past year, most notably the cancellation of its inaugural SMR project intended for an Idaho-based laboratory.
With a noteworthy 24% of NuScale’s stock held short as of September, the stage was set for a gripping short squeeze as investors perceived the news as a harbinger of rising momentum for nuclear energy adoption, particularly focusing on SMRs. Trading volume for NuScale had already surged nearly fourfold above its daily average before noon.
Navigating the Current Landscape
While stock prices soared, investors may need to exercise caution, recognizing the numerous obstacles that lie ahead for SMRs. NuScale itself is yet to boast substantial revenue figures, suggesting the need for a tempered outlook amidst the euphoria.
Nevertheless, the acknowledgment of Amazon’s positive stance towards nuclear, bolstered by a similar recent announcement from Alphabet, provides a glimmer of hope. The fiercely competitive nature of the industry warrants a pragmatic approach, with no certainties regarding NuScale’s dominance, should SMRs become mainstream. Given its developmental stage, NuScale’s stock is expected to remain volatile, pivoting in response to broader news surrounding SMRs.
Strategic Investment Amidst Market Volatility
Before delving into NuScale Power stock, investors are advised to deliberate on pertinent considerations. The investment advisory team at the renowned Motley Fool Stock Advisor has pinpointed ten exceptional stocks they believe can yield substantial returns, with NuScale Power not among them. This selection points towards potential lucrative opportunities that may unfurl in the coming years.
Reflecting on historical successes, such as Nvidia’s inclusion on a similar list in April 2005, paints a vivid picture of the transformative power of strategic investments. Rationalizing the stock market landscape, Stock Advisor offers investors a comprehensive blueprint for success, underpinned by the assurance of outperforming the S&P 500 by a significant margin since 2002.
*Stock Advisor returns as of October 14, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.
