Over the past couple of years, uranium and nuclear energy markets have enjoyed a renaissance thanks to surging global power demand and the global energy crisis triggered by Russia’s war in Ukraine. Uranium is no longer trading on legacy sentiment, with prices moving more on fundamentals characterized by tight physical supply, underbuilt production pipelines, and a policy-driven nuclear revival that’s accelerating faster than commodity markets anticipated.
The uranium market is experiencing a structural supply deficit, creating potential challenges for nuclear operators.
Unlike many commodities, uranium trading usually involves small volumes with specialized participants, making the nuclear fuel susceptible to significant uranium market volatility. Meanwhile, governments across the globe are repositioning nuclear as critical infrastructure rather than transitional tech. Last month, the Trump administration struck a partnership with Canada’s Cameco Corp. (NYSE:CCJ) and Brookfield Asset Management (NYSE:BAM) to build at least $80 billion in nuclear reactors.
However, the harsh reality of the long lead and construction times of nuclear facilities, coupled with the fact that some stocks in the space with zero revenues are in nosebleed territory, has sent the sector into a tailspin. Nuclear and uranium stocks have pulled back sharply from recent highs, with many seeing double-digit losses: the sector’s popular benchmark, VanEck Uranium and Nuclear ETF (NYSEARCA:NLR) has declined -16.6% over the past 30 days, at a time when the S&P 500 has gained nearly 3%.
Meanwhile, shares of advanced fission power plant developer, Oklo Inc. (NYSE:OKLO), are down -42.0% over the past month; Centrus Energy (NYSE:LEU) -35.9%, Energy Fuels Inc. (NYSE:UUUU) -33.9%, NuScale Power Corp. (NYSE:SMR) -47.7%, Uranium Energy Corp. (NYSE:UEC) -22.9%, BWX Technologies (NYSE:BWXT) -9.6%, Cameco Corp. (NYSE:CCJ) -6.1%, Vistra Corp. (NYSE:VST) -14.2% and NANO Nuclear Energy (NASDAQ:NNE) -40.2% and NexGen Energy (NYSE:NXE) -7.9%.
The market appears to be waking up to the reality that it could be up to a decade before we start to reap the benefits from the billions of dollars flowing into the sector. Whereas $80 billion can build enough reactors to power Virginia’s Data Center Alley, traditional reactors typically take 10 years or more to build. Meanwhile, the frequently touted small, modular reactors (SMRs) by the likes of NuScale Power, TerraPower and X-energy are still far from going mainstream primarily because the technology is still in early development and faces significant economic and regulatory hurdles.
While some prototype units are operational in countries like Russia and China, most designs are still in the theoretical or early construction phases. Indeed, NuScale is the first and only U.S. company to have its SMR design certified by the U.S. Nuclear Regulatory Commission. NuScale’s SMR features include a factory-fabricated, modular design that is scalable from one to 12 modules, with each module producing 77 MWe of power. Key features are its passive safety systems relying on gravity and convection, flexibility for on-grid and off-grid use, redundancy through independent modules, and a smaller footprint than traditional plants.
Amazon, on the other hand, has invested in X-energy with the goal of deploying up to 5 GW of SMRs by 2039.
Only Oklo Inc., Kairos Power and TerraPower have begun construction of their SMR plants; however, none have proven they can produce power at a commercial scale nor received regulatory approval to build a commercial system.
“There’s a lot going on, and nothing is going on,” BloombergNEF’s head nuclear analyst Chris Gadomski recently quipped.
To exacerbate matters, the markets have bid up these companies to absurd valuations despite many having no revenues to show for their troubles. To wit, Oklo’s market cap has at times exceeded $20 billion, despite the company having no operating reactors, no licenses to operate commercially, and no binding contracts to supply power. Wall Street analysts currently project Oklo will not generate significant revenue until late 2027 or 2028. Oklo’s current market cap is $15.3 billion.
Similar to Oklo, NANO Nuclear Energy currently sports a market cap of $1.6 billion with no revenue, no commercial products, and no commercial operation timeline. Its valuation is purely based on investor optimism about the future potential of nuclear energy, particularly in powering artificial intelligence data centers.
That said, the nuclear sector could see a quicker turnaround from restarting abandoned nuclear plants. Holtec International has laid out plans for its Palisades plant in Michigan to resume service early 2026 while Constellation Energy Corp. (NYSE:CEG) is on track to switch on its Three Mile Island reactor in 2027. Further, NextEra Energy Inc. (NYSE:NEE) recently announced that its Duane Arnold plant in Iowa will come back online by 2029.
By Alex Kimani for Oilprice.com
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