Nuclear Power Startups Are Starting to Look Like a Bubble: What Does This Mean for Investors?

In the rapidly evolving landscape of clean energy, nuclear power is experiencing a renaissance, driven by the insatiable energy demands of AI data centers and global commitments to carbon neutrality. However, a recent surge in nuclear startups—particularly those focused on fusion and small modular reactors (SMRs)—has raised red flags among analysts, who warn of an emerging bubble. This article explores the signs of overinflation in the sector, the implications for investors, and highlights the top 10 companies poised to capitalize on the nuclear energy market’s growth.

The Surge in Nuclear Startups and Bubble Concerns

The nuclear energy sector has seen unprecedented investment in recent years, with private equity and venture capital pouring record amounts into advanced nuclear companies in 2024. Startups like Commonwealth Fusion Systems are at the forefront, developing potentially game-changing fusion reactors that could provide limitless clean energy. The company recently raised $863 million and secured power sales deals with major players like Eni and Alphabet (Google’s parent).

Similarly, SMR developers such as Oklo and NuScale are promising smaller, more affordable reactors that could revolutionize power generation by being factory-built and easier to deploy. Yet, this enthusiasm may be outpacing reality. Wall Street analysts, including those from Bank of America, have downgraded stocks like Oklo (from “buy” to “neutral”) and NuScale (from “neutral” to “underperform”), citing valuations that far exceed the companies’ ability to deliver on promises.

Oklo’s share price, for instance, skyrocketed from about $8 to $115 since going public last year, fueled by hype around AI-driven energy needs. Goldman Sachs issued a neutral rating on Oklo despite its selection for a Department of Energy fast-tracking program, highlighting a disconnect between market optimism and fundamentals.

Department of Energy for a new fast-tracking program.

Signs of a bubble include skyrocketing valuations amid limited progress on regulatory approvals, supply chain constraints for nuclear fuel and containment vessels, and lengthy timelines for grid interconnection. Data center operators, prioritizing speed, may turn to faster alternatives like natural gas if nuclear projects drag on. As US Energy Secretary Chris Wright noted, while fusion could transform energy security, the sector’s hype risks mirroring past tech bubbles where promise outstrips execution.

Got Tax in 2025?

Implications for Investors

For investors, the nuclear bubble presents a double-edged sword. On one hand, the sector offers immense upside: The global push for net-zero emissions and AI’s energy hunger could drive trillions in investments. Retail investors now have access to public SMR plays like Oklo and NuScale, democratizing opportunities previously limited to venture capital.On the other, risks abound. Overvaluation could lead to sharp corrections if projects face delays or regulatory hurdles. Barclays sees potential upside for Oklo and NuScale stocks, but Bank of America warns of a “reality check” as fundamentals catch up to hype.

Investors should focus on companies with proven track records, diversified portfolios, and strong balance sheets rather than pure-play startups riding the wave of speculation. Diversification through ETFs, like those focused on uranium and nuclear, can mitigate risks while capturing growth.In essence, while the bubble may burst for overhyped startups, established players could emerge stronger, rewarding patient investors who prioritize due diligence over FOMO.Top 10 Companies Set to Take Advantage of the Nuclear Energy MarketsDrawing from industry analyses and market data, here are the top 10 companies well-positioned to benefit from nuclear energy’s expansion in 2025 and beyond. These include major utilities, technology providers, and resource suppliers, selected based on production capacity, innovation, and strategic partnerships.

This list emphasizes firms with tangible assets and growth potential amid the sector’s challenges.