Top Nuclear Stocks Thriving on Soaring Energy Demand

Key Points

• Utilities have surged in 2024, driven by rate cuts, AI power needs, and renewed nuclear interest, resulting in several nuclear stocks posting wild gains YTD.
•  Up 222% YTD, Vistra (VST) leads utilities with nuclear capacity and energy storage, supported by favorable analyst sentiment.
• NuScale Power (SMR) is up almost 500% YTD and shows promise with its small modular rectors, however the stock remains high-risk due to its pre-revenue status.

The utilities sector, represented by the Utilities Select Sector SPDR ETF NYSE: XLU, has outpaced the market in 2024, rising by 25% year-to-date and surpassing the SPY ETF's nearly 20% return. This outperformance has positioned utilities as a surprise leader, driven by the recent rate cuts, renewed interest in nuclear energy, and the rapid expansion of artificial intelligence (AI) initiatives. AI and electric vehicles (EVs) are set to drive immense electricity demand, offering long-term growth potential for utility providers. With the nuclear sector poised for a renaissance, here’s a closer look at several stocks leading the charge and gaining for their nuclear efforts.

Vistra Aligns with AI-Driven Electricity Demands and Nuclear Power Needs

As one of the best-performing names in the S&P 500 this year, Vistra NYSE: VST has surged 222% YTD, capturing investor attention for its strategic alignment with AI-driven electricity needs. The company operates 41,000 MW of generation capacity, including 6,400 MW of nuclear power. It boasts the second-largest energy storage capacity in the U.S., which is crucial for meeting growing AI infrastructure demands. Vistra’s unique positioning even attracted legendary investor Stanley Druckenmiller, who initiated a position in the stock. This comes after the investor closed out his position in NVDA, a widely successful trade that captured the start of the AI hype and revolution.

With its robust business model and favorable tailwinds, Vistra now has a consensus Buy rating. Analysts expect continued upside, with Royal Bank of Canada raising its price target to $141, JPMorgan Chase initiating coverage with an Overweight rating, and Guggenheim increasing their target to $177. These targets imply further upside ahead, and with earnings scheduled for November 7, Vistra remains a top choice for investors looking to gain exposure to both the nuclear and AI power demand trends.

NuScale’s SMR Technology Offers a Compact, Scalable Nuclear Solution

NuScale Power NYSE: SMR is a pioneer in advanced small modular reactors (SMRs), which provide a compact and scalable alternative to traditional nuclear reactors. Its flagship NuScale Power Module can generate up to 60 megawatts of electricity. Despite the surge of investor enthusiasm, NuScale remains a pre-revenue company, as its reactors still need to be delivered and operational. With ambitious plans to roll out its first units in the coming years and capture meaningful sales by the end of 2025, NuScale's business model capitalizes on anticipated demand, yet revenue generation may still be years away. 

However, the stock’s 495% YTD gain underlines investor optimism surrounding SMR technology. However, the current 25% short interest and limited 80 million-share float suggest high volatility and may have contributed to its YTD gains. Due to its pre-revenue status, NuScale’s potential carries considerable risk, and analyst sentiment reflects caution despite its Moderate Buy rating. The consensus price target of $10.39 forecasts a possible 50% haircut from current levels.

Oklo and Nano Nuclear: Best for Short-Term Traders Seeking Momentum

Small-cap nuclear stocks like Oklo Inc. NYSE: OKLO and Nano Nuclear Energy Inc. NASDAQ: NNE have each posted substantial gains YTD, though both remain pre-revenue, presenting significant risk.

Oklo develops fast fission reactors to deliver clean energy, while Nano Nuclear focuses on microreactor technologies, including the ZEUS solid-core battery reactor and the ODIN low-pressure coolant reactor.

Oklo and Nano Nuclear hold speculative appeal, similar to SMR, having demonstrated strong momentum YTD.

However, without established revenue streams, these stocks may be better suited for short-term traders rather than long-term investors.

Elevated risk accompanies their triple-digit gains, making them volatile picks in an otherwise growth-driven sector.

Nuclear Sector Presents High-Growth and Speculative Options for Investors

With AI's influence set to drive electricity demand and interest rate cuts supporting the sector, nuclear energy stocks are positioned as an attractive yet mixed opportunity. From high-growth potential in Vistra to speculative small-caps like NuScale, Oklo, and Nano Nuclear, the nuclear renaissance presents options across the risk spectrum for those looking to invest or even trade in the energy transition.