Shares of NuScale Power (NYSE: SMR), a pioneer in nuclear energy renowned for its small modular reactors (SMRs), witnessed an astronomical surge today, propelled by rumors swirling around tech behemoth Amazon’s potential adoption of this revolutionary reactor type to cater to its data center power needs.
With whispers of a short squeeze circulating the market due to a substantial portion of NuScale’s shares being held short, the stock catapulted to an all-time high during morning trading, boasting an impressive 31.6% surge as of 12:36 p.m. ET. Interestingly, this exciting development also cast a positive spell on shares of Fluor (NYSE: FLR), a significant investor in NuScale, witnessing a sharp spike of 7.2%.
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Amazon’s Foray into the Nuclear Domain
Amazon made waves earlier today by divulging its involvement in three nucleus energy projects. While NuScale wasn’t specifically mentioned in these agreements, the tech titan expressed a keen interest in diversifying its carbon-free energy resources, including nuclear power, with a focus on fostering the development of new SMRs. Moreover, Amazon spearheaded a $500 million investment initiative in X-energy, a potential competitor to NuScale, and inked a groundbreaking collaboration with Dominion Energy, a Virginia-based utility firm, to explore the potential of a novel SMR venture.
Although Amazon’s announcement didn’t spell out direct implications for NuScale Power, it’s crucial to recognize that NuScale stands alone as the sole U.S. entity in possession of a coveted SMR design license from the Nuclear Regulatory Commission. While facing a setback last year due to the cancellation of its inaugural SMR program slated for an Idaho-based lab, NuScale seems to be riding the wave of momentum generated by the revered tech conglomerate’s strategic moves. With a noteworthy 24% of its stock sold short as of September, today’s surge was a manifestation of renewed investor confidence in the prospects of elevated nuclear energy adoption, particularly with a focus on SMR deployment. The trading volume of NuScale had nearly quadrupled its daily average activity before the noon bell.
Implications for NuScale Power
It’s imperative for investors to tread cautiously amid the euphoria surrounding NuScale’s meteoric rise since several hurdles continue to loom over the SMR landscape. Additionally, NuScale has yet to establish a substantial revenue stream, adding an element of uncertainty to its valuation. The intriguing shift towards nuclear power adoption by industry stalwarts like Amazon, complemented by recent affirmations from Alphabet, underscores a promising trend in the energy sector. However, amidst a fiercely competitive landscape, NuScale’s position as a development-stage entity foreshadows ongoing volatility, hinging on broader industry developments pertaining to SMRs.
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