Amazon’s AMZN latest venture into nuclear energy signifies a seismic shift in the industry. Despite being a linchpin in carbon reduction efforts, hurdles like costs and safety concerns stood as formidable roadblocks. However, with the advent of Small Modular Reactor (SMR) technology, a game-changing evolution is on the horizon. SMRs, as the name suggests, emphasize compact, scalable reactors that are not only more economical but also easier to construct, a boon for modern tech giants. Firms like NuScale Power Company SMR, the driving force behind SMRs, are primed to thrive in this burgeoning sector.
Tech behemoths such as Amazon, Microsoft MSFT, and Google GOOGL are increasingly turning to SMR technology to fuel their data centers. These centers, housing cutting-edge semiconductors and servers, consume unprecedented levels of power. Recent estimates highlight that AI data centers demand 1.5 times more power than their predecessors, with their numbers swelling alongside rapid technological advancements. Apart from aiding corporate sustainability goals, SMRs promise to bolster the national grid, curtailing the reliance on carbon-based energy sources.
The Essence of NuScale Technology and Its Significance
NuScale Technology spearheads the design, manufacturing, and deployment of the sole U.S.-certified SMR in existence. The NuScale Power Module, generating 77 megawatts, a modest figure compared to the U.S.’ energy requirements, holds the capability for expansion using the VOYGR technology, facilitating the amalgamation of up to 12 reactors into a unified entity. These reactors serve multifaceted purposes, producing power while channeling generated heat for other uses like desalinization and hydrogen output. NuScale propels its products to the market through a collaboration with ENTRA1.
While NuScale is yet to amass substantial revenue, projections point to a sales upsurge by 2025. A recent pact inked with Standard Power, merely a preview of things to come, is testimony to this momentum. Standard Power intends to establish two facilities in Pennsylvania and Ohio to power its data centers. Specializing in data centers and colocation amenities for cryptocurrency miners, AI, and other high-powered computing requirements, Standard Power plots two 12-unit VOYGR plants with a cumulative capacity of 1,848 MWe.
Sell-Side Endorsements vs. Impeding Challenges
Market analysts are increasingly favoring NuScale in 2024, portending a potential tailwind for the forthcoming quarters and 2025. Recent reports, led by CSLA and Craig Hallum, which assign a Moderate Buy/Buy rating to the stock, advocate optimism. Nonetheless, the consensus price target trails recent valuations by approximately 50%, positioning the market above the upper echelon of the assessed range. Absent fresh evaluations, a pronounced correction might be in the offing to align with analysts’ prevailing sentiment.
Despite burgeoning institutional backing acting as a market catalyst, ownership remains relatively light at 15% of all shares, with quarterly transactions slowing in light of escalating share prices in 2024. A marked surge in short interest, exceeding 25% by September’s end, poses cause for concern as it has the potential to amplify market swings. Investors should brace themselves for volatility, with the stock conceivably correcting by 15% to 30% before attaining sturdy support levels in this scenario.
Market Dynamics: NuScale Surges to New Heights
SMR shares have witnessed robust price movements, surging over 40% post-Amazon’s announcement, fuelled by momentum, short covering, and the Small Modular Reactor frenzy. Surpassing critical resistance at $16.75, with corroborating indicators validating this uptrend, the chart suggests a pronounced bullish sentiment. With the indicators hovering at lower ranges, the market potentially harbors further upward momentum in the ensuing weeks before reaching a peak.
The article “NuScale Rockets Higher on Amazon Deal: How High Can It Go?” was first published on MarketBeat.
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