Oklo's Nuclear Solution for AI's Staggering Power Demands

Any investor paying attention to the news knows: the rapid growth of artificial intelligence (AI) will need exorbitant amounts of power, and many electricity grids were simply not built to accommodate these demands. Still, familiar as that scenario is, the amount of power that future AI is projected to need is simply staggering. The International Energy Agency (IEA) estimates that global electricity consumption from data centers could more than double to around 945 terawatt hours (TWh) by 2030. In short, the U.S. is going to need power, and lots of it, to keep scaling AI aggressively. Plenty of start-ups have answered that call with novel energy technology, like fuel cells. But one company already has more than a foot in the door: the advanced nuclear company, Oklo (OKLO +3.64%). Oklo's big idea: Small reactors If Oklo's not on your radar yet, here's the lowdown. Oklo is developing small, fast-spectrum nuclear reactors ("Aurora powerhouses") with complementary fuel recycling. The reactors, at least in renderings, look like a cross between an eco-cabin and a cathedral. These powerhouses can supply continuous 24/7 on-site power to industrial customers, like data centers. They can also use fresh HALEU (high-assay low-enriched uranium), or recycled fuel, to generate on-site power, and they can operate for a decade before refueling. Oklo claims its Aurora design can provide up to 75 megawatts (MWe) of power, which is enough to power most large and some hyperscale data centers. Today's Change ( 3.64 %) $ 3.33 Current Price $ 94.78 Key Data Points Market Cap $15B Day's Range $ 89.36 - $ 96.69 52wk Range $ 17.42 - $ 193.84 Volume 531K Avg Vol 14M Unlike traditional reactor designers, who typically sell reactors to utilities, Oklo wants to own and operate its powerhouses and sell the electricity they generate. If it works, Oklo's business could look like a utilities company with recurring revenue. Commercially, Oklo hasn't built an Aurora powerhouse -- yet. But it has some tentative deals in the data center space, including strategic relationships with Equinix (EQIX 0.01%) and Switch. It also recently partnered with Meta (META 0.04%) to develop a 1.2 gigawatt (GW) power campus in Ohio to help power Meta's data centers. The white elephant in the room: Revenue On paper, Oklo is a potential power source for AI. The kicker, however, is that the company lacks the regulatory approval to operate its reactors commercially. On that front, Oklo is advancing through the Nuclear Regulatory Commission's process. Thanks to support from the White House (President Trump is adamant that the U.S. will rebuild its nuclear capacity), the company is in DOE pilot programs, which will help it demonstrate its technology and hopefully accelerate the licensing timeline. That timeline, however, is still a little fuzzy. The company itself is targeting a launch date for its first commercial plant between late 2027 and early 2028. That could leave investors waiting two years or more before meaningful revenue comes in. Losses for Oklo have been heavy lately, with a third-quarter operating loss of roughly $36 million. This is to be expected for a start-up heavy in the R&D phase, and Oklo apparently has cash (about $1.2 billion, including marketable securities) to fund it. Still, Oklo has a ways to go, and it's not clear how long it will be before its reactors are generating power for AI data centers. Its technology has some precedent -- a fast reactor design like Aurora was demonstrated at an Idaho lab in the 90s -- but outside the laboratory, it's unclear how its reactors will perform. There could, in other words, be some technology challenges before it can scale.