Oklo (OKLO) surged for a second straight day, rising 4.5% today, after Lightbridge (LTBR) on Jan. 22 announced a new, pending partnership with OKLO. Oklo is building small, modular nuclear reactors, while LTBR “develops nuclear fuel technology.”An aerial view of a nuclear plant, its domes casting a unique shadow. The Potential Alliance Between OKLO and LTBR The two firms signed a memorandum of understanding. Under the agreement, the firms will evaluate “opportunities for cooperation in reprocessing and recycling used uranium-zirconium fuel,” LTBR noted in a regulatory filing. Furthermore, LTBR intends to “conduct a feasibility study of co-locating a Lightbridge Commercial-scale Fuel Fabrication Facility at Oklo’s proposed commercial fuel fabrication facility,” Lightbridge reported. Investment Bank Is Bullish on Nuclear Power, OKLO Appearing on CNBC yesterday, George Gianarikas, an analyst at investment bank Canaccord Genuity stated that nuclear power would be instrumental in boosting electricity production going forward. Gianarikas noted that the AI boom would likely cause electricity demand to jump, and he identified OKLO as one firm that’s well-positioned to benefit from the latter trend. We need a boatload of capital expenditure to enable artificial intelligence and the sustainability revolutions,” he said. “That involves, very likely, a lot of nuclear power because it’s clean and it’s base load,” Gianarikas stated. While we acknowledge the potential of OKLO, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OKLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ ALSO 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock Disclosure: None. This article is originally published at Insider Monkey.
Regulatory Risks
Oklo has several significant regulatory challenges to overcome. While nuclear energy promises much, it is still very much regulated. This means the necessary permits for new reactors could be quite time-consuming. Oklo is still going through all the complex regulations and any kind of delay or setback could really hold the company back and hurt the stock performance.
Technology Risks
Oklo’s technology ispromising, but still under development. Anything new is a gamble, and there is always the possibility that things may not work out as hoped. Technical issues with Oklo’s reactors, delays, or cost overruns can all negatively affect the company’s financial health and investor confidence.
Public Perception of Nuclear Energy
public opinions on nuclear energy can indeed be subdivided, and despite the advances of Oklo, there is still a stigma attached to nuclear energy in most parts of the world. Winning back the popular support and governments that nuclear power with small modular reactors has indeed been a long and somewhat arduous task. Negative perceptions or incidents could stain the reputation of Oklo as well as stock value.
Oklo isn’t alone in the race of developing small modular reactors. Many companies are part of the nuclear space, which have more experience and resources; they are competing with similar technologies in the market. The competition will be fierce; Oklo would need to continue to innovate on its technology to stay ahead, as well as receive regulatory approvals.