Nuclear stocks surge after U.S. Army launches program to deploy small reactors
News Summary
Nuclear stocks rallied on Wednesday after the U.S. Army launched a program to deploy small modular reactors (SMRs). NuScale, an SMR developer, saw its shares soar 17%, while Oklo and Nano Nuclear were up nearly 7% and 4% respectively. Uranium company Centrus also climbed 13%. In partnership with the Defense Innovation Unit, the U.S. Army initiated the "Janus Program" to build commercially owned and operated micro nuclear reactors, aiming to help developers scale their businesses. This move responds to President Donald Trump's May executive orders designed to accelerate the deployment of advanced reactors, which include a mandate for the Department of Defense to have a reactor operating at a domestic military installation by September 30, 2028. Investors have heavily speculated on the fortunes of companies like NuScale, Oklo, and Nano Nuclear, despite none having deployed a reactor yet and two lacking any revenue (NuScale posted $8 million in Q2). Market enthusiasm for nuclear power is fueled by AI power demand and the Trump administration's directives, though Goldman Sachs recently advised caution on Oklo.
Background
In May 2025, U.S. President Donald Trump issued executive orders aimed at accelerating the deployment of advanced nuclear reactors, specifically mandating the Department of Defense to have at least one reactor operational at a domestic military installation by September 30, 2028. The U.S. Army's "Janus Program" is a direct response to these presidential directives, seeking to advance the commercial development and deployment of micro nuclear reactors in partnership with the Defense Innovation Unit. The nuclear energy sector currently holds high expectations for the commercial prospects of Small Modular Reactors (SMRs) and microreactors, partly due to the surging demand for high-density power from emerging technologies like artificial intelligence. However, many companies in this space, including NuScale, Oklo, and Nano Nuclear mentioned in the news, remain in early developmental stages, yet to deploy their technologies at scale or achieve significant revenues.
In-Depth AI Insights
What are the deeper strategic motivations for the U.S. Army's accelerated microreactor deployment, beyond the stated goal of commercial scaling? Beyond supporting developers and meeting military base energy needs, this move likely aims to achieve broader national security and geopolitical objectives: - Energy Independence and Resilience: Reduce reliance on vulnerable traditional energy supply chains, ensuring energy autonomy for military operations, especially in remote or contested areas. - Technological Leadership: Establish U.S. global leadership in next-generation nuclear energy technologies, particularly small, deployable reactors, countering potential competition from other nations like China and Russia. - Industrial Base Reinforcement: Stimulate the revitalization and expansion of the domestic nuclear supply chain and manufacturing capabilities through early government procurement commitments, creating jobs and enhancing economic security. How might President Trump's executive orders and the Army's initiative influence the broader energy transition landscape and investor sentiment towards nuclear power? This will have several profound impacts: - Policy Endorsement and De-risking: Strong governmental backing, especially with concrete deployment commitments from the defense sector, will significantly de-risk early nuclear projects, attracting more private capital. - Narrative Shift: The narrative around nuclear power will expand beyond solely a climate change solution to encompass national security, industrial competitiveness, and power assurance for emerging industries like AI, garnering broader political and public support. - Accelerated Technology Maturation: The stringent requirements and accelerated timelines of military applications will push for rapid iteration and commercialization of microreactor technology, potentially faster than purely civilian market processes. Despite recent stock surges and policy tailwinds, what are the realistic investment risks facing investors? Investors should be wary of the following key risk factors: - Technological and Regulatory Challenges: Even with government backing, scaling nuclear technology faces inherent risks of stringent regulatory approvals, potential technical bottlenecks, and construction delays. - Lack of Early Profitability: Companies like Oklo and Nano Nuclear have no revenue yet, and NuScale has only modest revenue, indicating that their business models and paths to profitability remain highly uncertain. - Market Speculation and Overheating: Market sentiment may overreact, leading to valuations decoupled from actual commercial progress and profitability, especially under grand narratives like "AI power demand," potentially creating bubble-like risks. - Cost Overrun Risks: Historical experience shows that nuclear projects often entail massive upfront investments and potential cost overruns, which could erode early investor returns.