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Oklo (OKLO) fell over 50% from peak levels but is still up big in recent years.
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Oklo trades at a $15B valuation despite being pre-revenue.
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Cameco (CCJ) trades at 64 times forward P/E after rising over 50% in the past year.
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The nuclear energy companies, which include the likes of reactor innovator Oklo (NASDAQ:OKLO) and Canadian uranium producer Cameco (NYSE:CCJ), have been a pretty popular way to bet on the great AI race without betting on the technological innovators themselves. Undoubtedly, tech valuations have become quite high of late, and with growing concern over a potential plunge in AI stock valuations, perhaps the energy plays powering the boom could be the way to score decent returns with potentially less risk, given nuclear energy isn’t solely for powering AI data centers.
Either way, given the appreciation in the nuclear energy stocks in recent months, I do think that some magnitude of the boom is already priced in. And while we might not yet be in an AI bubble, investors should always be ready for more volatility should that AI trade start to really reverse course in a hurry.
Even if the AI innovators and model makers don’t get a great return on their spending, I think it’s likely that the demand for energy is still going to be quite hefty. At the end of the day, the AI data center spenders are going to need to pay their energy bills, even if their returns on AI spend don’t come to fruition in a short enough time span.
So, in a way, I guess nuclear energy plays may be a more interesting way to play the boom from the background, with perhaps a bit less pain should a tech wreck end up happening at some point. But which nuclear energy option stands out as being the better value at a time like this? I’ll give my take.
Oklo shares are fresh off a more than 50% haircut from their peak levels, and while the bottom may (or maybe not?) be in, I still view the nuclear reactor innovator as one of the most exciting hyper-growth names to play the space.
Also, the stock is still up triple-digit percentage points from when I originally recommended the stock more than a year ago. Such incredible downs are really to be expected from stocks that have enjoyed such euphoric and meteoric rises. While I remain a massive fan of the innovation (think safer, cleaner, smaller reactors) going on at Oklo and the AI nuclear energy tailwinds at play, I’m not so sure I’m a huge fan of the stock any longer, even if the latest round of earnings were decent (but not decent enough for investors).
Not after a more than 800% gain in two years. If the latest sell-off steepens, I might give the name another look, but until then, the $15 billion hyper-growth darling is too difficult to value at the time of writing. Further, too many investors and traders have gotten into the name in the past year.
So, it’s no longer a hidden gem as I once praised it to be. The pre-revenue firm has attracted a lot of attention following its massive gain. And with that, there’s going to be a higher bar to pass every quarter. Though I could be wrong to avoid Oklo shares on a decline, I’m content on the sidelines, given valuation difficulties and the massive unknowns ahead relating to the future of the AI trade and the potential for a bubble bust.
I’d much rather play the nuclear energy boom from the commodities side with the likes of a producer like Cameco. Are shares still a bit frothy after soaring over 50% in the past year? Probably. But at the very least, there are earnings to go by.
With shares trading at over 64 times forward price-to-earnings (P/E), the name seems undeniably expensive, but perhaps far less so than Oklo, especially if the small nuclear reactor growth story doesn’t happen fast enough for many traders who’ve punched their ticket into the name with the hopes of a quick gain.
With less explosive action in the stock and plenty of deals that could lead to increased optimism, the miner might be one of the best ways to play the AI boom as it goes nuclear.
In any case, Cameco stock stands out more as a five-year hold than a trade, given commodity prices can go either way over the short term. Over the longer run, though, secular tailwinds, I think, point to much higher uranium prices.
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