Oklo has already grown tenfold since last May. Here’s why it can do it again.
Investors who bought Oklo (OKLO +3.03%) during its initial public offering (IPO) last May and held on through all the rocky and exhilarating months that have transpired are now likely sitting on a gain that’s close to 600%.
At one time this year, Oklo shares had grown more than tenfold their original price.
Few start-ups can boast the same success that Oklo has had so far on the market, even fewer in the nuclear energy sector. And yet if you believe artificial intelligence (AI) will demand far more clean power than today’s grid can handle, another tenfold gain in this stock looks plausible.
Image source: Getty Images.
A (tiny) nuclear beat on AI power
Oklo is engineering a small compact nuclear reactor (called Aurora) that is designed to run for a decade or longer between refueling.
Rather than build huge nuclear power plants in one area, which are not only expensive but bulky, Oklo wants to build smaller reactors near to where its customers already are. Its strategy is to go after high-margin customers, like data center operators, who will be more willing to sign long-term contracts for reliable power.
Oklo already has some marquee interest lined up. Data center giant Equinix has already prepaid $25 million toward a 20-year deal for up to 500 megawatts of clean power. Meanwhile, both Switch and Diamondback Energy (FANG +2.14%) have also entered strategic relationships with Oklo.
Today’s Change
(3.03%) $2.69
Current Price
$91.41
Key Data Points
Market Cap
$14B
Day’s Range
$89.03 – $94.51
52wk Range
$17.14 – $193.84
Volume
209K
Avg Vol
20M
Gross Margin
0.00%
Dividend Yield
N/A
If Oklo grows one hundredfold — turning a $1,000 investment into $100,000 — it’s market cap would cross over into the trillion dollar territory. Considering that the global utilities industry is worth about $6.7 trillion today, that seems like a tall order for a single start-up.
That’s not to say it would impossible. The utilities sector is expected to grow steadily over the next half decade (one estimate projects a CAGR of about 5%), and advanced nuclear technology could play a role in stimulating more sector growth. But a tenfold gain in Oklo’s stock from here would require a long period of time — and patience — as the company works both toward commercialization and turning on its first powerhouses.
For long-term investors who understand those risks and size positions carefully, a small stake in Oklo could become far more meaningful if it proves its reactors in the real world.
