NuScale’s Historic SMR Deal Sparks a Nuclear Stock Rally

NuScale Power’s stock has witnessed a remarkable surge in recent weeks, propelled primarily by a groundbreaking agreement with the Tennessee Valley Authority (TVA). This deal, which centers on a massive 6 gigawatt small modular reactor (SMR) deployment program, is celebrated as the largest of its kind in U.S. history. Investors reacted enthusiastically, leading to a staggering 20% jump in NuScale’s share price in just one week, with October 14 marking a notable intraday increase of around 14% and the stock closing around $55 on October 15.

The Significance of the TVA Agreement

The TVA contract, executed through NuScale’s ENTRA1 Energy venture, involves the installation of up to six 77 MWe modular reactors within TVA’s service area, which is expected to provide power for approximately 4.5 million homes and support a growing number of AI data centers. This monumental deal symbolizes not just a business win for NuScale but also serves as a substantial endorsement of its small modular reactor technology. John Hopkins, NuScale’s CEO, expressed that this partnership is a “historic moment for clean, reliable energy,” emphasizing the technology’s potential to deliver carbon-free baseload electricity essential for critical industries faced with rising power demands.

Broader Momentum in Nuclear Energy

The positive sentiment surrounding NuScale is further buttressed by broader advancements and governmental endorsements in the nuclear energy sector. Just days before the TVA deal announcement, the U.S. Army and Department of Energy unveiled “Project Janus,” a new initiative aimed at deploying small microreactors on military bases by 2028. This plan reflects a burgeoning governmental interest in investing in advanced nuclear technologies, underscoring their importance in energy security.

Competitor Landscape: GE Vernova Steps Up

In the competitive landscape, GE Vernova, General Electric’s energy spinoff, is making significant strides with its own BWRX-300 reactor. This 300 MWe small modular reactor design has garnered substantial attention, especially following GE’s partnership with Hitachi and Samsung to market the BWRX-300 on a global scale—five units have been proposed in Sweden alone. Despite GE Vernova’s stock soaring nearly 97% year-to-date, some analysts remain cautious, citing challenges within GE’s brands, particularly in the wind turbine sector. Notably, while GE Vernova may have a higher market presence, NuScale holds a critical advantage as the only NRC-certified SMR design currently approved in the U.S.

Caution from Analysts

Wall Street’s reaction to NuScale’s rising stock has not been entirely supportive. While viewed as a frontrunner in the SMR arena, analysts have generally pushed for a “Hold” rating. They are cautioned by indicators suggesting the stock may currently be overvalued, with a forward price-to-sales ratio drastically higher than competitors like GE Vernova.

Global Nuclear Revival Gains Traction

Globally, the push for nuclear energy shows no signs of slowing down, as evidenced by renewed commitments from countries like Italy and Poland, which are looking to restart nuclear projects, including advanced SMRs. The broader SMR market is projected to grow between $15-20 billion by 2030, depending on the successful execution of new reactor projects, further validating interest in nuclear’s role as a sustainable energy source.

NuScale’s Path Forward

Despite the promising outlook, the path for NuScale is not entirely clear-cut. Currently, the company is not yet generating revenue and is facing substantial operational challenges, which include an ongoing cash burn of about $95 million per quarter. The anticipation surrounding their reactors points to a first commercial plant not being operational until at least 2030, raising concerns about the feasibility of meeting the market’s high expectations.

Execution Risks and Challenges

Execution difficulties have marred previous nuclear projects, with historical instances of escalated costs and missed deadlines clouding industry sentiments. For instance, the cancellation of NuScale’s flagship six-module project in Idaho due to ballooning costs serves as a poignant reminder of the challenges that still plague the nuclear sector. As NuScale’s CEO has noted, securing actual customers for their reactors remains a hurdle, as well as ensuring the financial backing necessary for project execution.

Valuation and Investor Sentiments

Amid this upheaval, analysts remain skeptical of the vast valuations attributed to companies like NuScale and Oklo, another high-flying nuclear firm. With Oklo’s stock shooting up by over 500% in 2025, questions of sustainability loom large in a sector rife with speculative fervor. Critics argue that while the outlook for nuclear is bullish, current share prices may not truly reflect the underlying fundamentals, prompting many on Wall Street to maintain a neutral stance until further clarity emerges on profitability and operational success.

The general consensus appears to lean towards a Moderate Buy on GE Vernova due to its diversified portfolio, in contrast to NuScale, which is still viewed as uncharted territory despite its significant technological milestones. As the nuclear energy landscape evolves, the balance between promise and risk will play a pivotal role in shaping investor sentiments moving forward.

The Future of Nuclear Energy

As governments worldwide grapple with energy security and climate change, the nuclear sector has the potential to enter a transformative era, particularly centered on small modular reactors. The emphasis on SMRs as a clean energy solution that can power crucial infrastructure like AI data centers reveals the strategic importance of this technology in the modern energy landscape.

Importantly, the successful rollout of advanced nuclear technologies hinges on the execution of pioneering projects and the establishment of solid customer bases. Moving forward, the focus will be on how effectively firms like NuScale and GE Vernova navigate the challenges to capitalize on burgeoning market opportunities. The interplay of optimism and caution within the sector will undoubtedly influence investment dynamics and the broader nuclear revival narrative over the coming years.