## Amazon’s Nuclear Energy Push Sparks a SMR Boom: NuScale Power’s Stock Soars
Amazon’s recent foray into nuclear energy has sent shockwaves through the industry, particularly for the burgeoning market of Small Modular Reactors (SMRs). This move signals that SMR technology, long considered a key player in carbon reduction goals, has finally reached a critical mass, overcoming past hurdles of cost, time constraints, and safety concerns.
The appeal of SMRs lies in their smaller, modular design. This approach allows for more efficient and cost-effective construction, making them a compelling solution for companies like Amazon, Microsoft, and Google, which are increasingly looking to power their data centers with clean energy. These data centers, consuming immense amounts of power to run advanced semiconductors and servers, represent a significant energy demand. The rise of artificial intelligence (AI) further exacerbates this demand, with estimates showing AI data centers consuming 1.5 times more power than their predecessors.
NuScale Power: A Leading Player in the SMR Revolution
NuScale Power stands out as a leading player in the SMR space, developing and deploying the only U.S.-regulated SMR currently available. Their flagship NuScale Power Module (NPM) generates 77 megawatts of power, a seemingly small amount compared to national demand. However, the real power lies in the scalability of their VOYGR production plant technology. By linking up to 12 reactors into a single unit, NuScale can deliver a significant power output, reaching 1,848 MWe in total.
The versatility of NuScale’s technology extends beyond power generation. Their reactors can be used for various purposes, including desalination and hydrogen production, making them a valuable asset for a range of industries. NuScale commercializes its products through a strategic partnership with ENTRA1, and while the company hasn’t yet generated significant revenue, it’s on track to ramp up sales in 2025. A recent deal with Standard Power, a private equity firm focused on data centers and colocation services, exemplifies this trajectory. Standard Power plans to build two NuScale facilities in Pennsylvania and Ohio to power its data centers, further solidifying the company’s position in the growing SMR market.
Analyzing NuScale’s Stock: Bullish Outlook and Potential Risks
Analysts are increasingly optimistic about NuScale’s prospects, particularly in light of Amazon’s recent investment. Initiated coverage reports from CSLA and Craig Hallum have pegged NuScale’s stock as a Moderate Buy/Buy, adding further fuel to the market’s bullish sentiment. However, it’s important to note that the consensus target price remains about 50% below the recent stock price, and the recent price jump has pushed the market above the analysts’ target range. This suggests that a potential correction could occur if the stock does not receive new positive revisions.
While institutional support is building, ownership remains relatively low at 15% of shares, and quarterly activity has slowed as share prices have climbed. Additionally, high short interest, exceeding 25% at the end of September, could amplify price swings and create volatility in the market. Short sellers may be repositioning at the new highs, potentially leading to a 15% to 30% correction before the stock finds solid support levels.
Technical Outlook: NuScale’s Price Action Remains Vigorous
The price action in NuScale’s stock has been robust, surging over 40% following Amazon’s news. This momentum, coupled with potential short-covering and the growing excitement surrounding the SMR market, could continue to drive the stock upwards. The market has broken through crucial resistance levels at $16.75, with indicators confirming this upward trend. This gives the chart a strong bullish bias. However, because indicators are currently low within their respective ranges, the market may continue to advance for several more weeks before potentially topping out.
The rise of SMR technology is undeniably a significant development in the energy sector, offering a viable solution for achieving carbon neutrality and meeting the energy demands of the future. NuScale Power, with its innovative technology and strategic partnerships, is well-positioned to capitalize on this growing market. However, investors should approach NuScale’s stock with a balanced perspective, recognizing both its potential and the inherent risks associated with its growth trajectory.