Insightful reader (and most of ours are) may have noticed that amidst the hubbub surrounding small nuclear reactors powering artificial intelligence we haven't really pitched the companies, the Oklos and NuScales and Nano Nuclears and there's a reason for that: they aren't businesses yet. At best they are trading cards, lottery tickets, call options with unknown terms of exercise and expiration.
This view of the nascent group can look pretty darn fuddy-duddy in light of some of the moves in the stocks—60% to 120% in the last month and over 400% year-to-date but before they get to the point of having sales and earnings and cash flows there will be other opportunities to buy them, or their new competitors coming up.
Once again it's Adam Smith and The Great Winfield and the Voodoo Beach Bunnies.*
And the headline story from Observer, October 24:
Some small modular reactors are "not going solve anything in the 2020s."
A new generation of nuclear producers, called small modular reactors (SMRs), are attracting the attention of Big Tech companies as they scramble to balance climbing power demands stemming from A.I. projects with clean energy goals. These small reactors have a power capacity of 300 megawatts—enough to power roughly 250,000 U.S. homes—and are about a third the size of the traditional nuclear reactor. Ideally, SMRs can be built in a process similar to an assembly line and easily put together at the site. But the cost of spearheading a first-of-its-kind project, coupled with a shaky regulatory environment, threatens efforts to commercialize the technology in the U.S.
The development of large language models, which demand and consume enormous amounts of energy, has set off a scramble among Big Tech firms to secure more clean power. The U.S. is the fastest growing market for data centers, according to McKinsey, which forecasts demand to more than triple by 2030 to 80 gigawatts annually.
All this demand is disrupting already strained efforts to move towards a carbon-free grid. The Department of Energy estimates the U.S. will need approximately 700-900 gigawatts of additional clean power generation capacity to reach net-zero emissions by 2050.
Several Big Tech firms have recently signed agreements with nuclear providers: Microsoft (MSFT) signed a deal to reopen a defunct nuclear plant in Pennsylvania; Amazon (AMZN) has inked three contracts to secure nuclear power in Virginia and Washington state; and Google (GOOGL) has signed an agreement with the startup Kairos Power to bring up to 500 megawatts of clean power to U.S. electricity grids, with the first reactor planned to be operational by 2030.
Some experts say nuclear has significant potential to contribute to decarbonization in some countries. But it will require overcoming hurdles, from public mistrust to underinvestment, Rafael Mariano Grossi, Director General at the International Atomic Energy Agency (IAEA), said at a conference this week.
“Nuclear technologies are particularly well suited for data centers given their ability to provide resilient, 24/7 electricity,” a Department of Energy (DOE) spokesperson told Observer.
“A timeline earlier than 2030 just isn’t realistic.”
Experts in the energy industry generally agree that SMRs are far from achieving commercial status. Currently, there are just three operating SMRs in the world; none in the U.S.Some small modular reactors are “not going solve anything in the 2020s,” Matt Garman, the CEO of Amazon Web Services, said Monday (Oct. 21) at the WSJ Tech Live event....
There's an interesting dichotomy developing in the markets, one that we've seen before.
The old pros are cautious, befuddled and a bit scared. Folks with less than a decade at the market are making money.
Adam Smith noted it in the 'sixties bull market (The Money Game via Contravest, January 22, 2000):
There is one wonderful chapter where the consummate pragmatic speculator, the Great Winfield, is lamenting his performance problems in a wildly speculative bull market.
“My boy,” said the Great Winfield over the phone. “Our trouble is that we are too old for this market. The best players in this kind of a market have not passed their twenty-ninth birthdays. Come on over and I will show you my solution.”
So Adam Smith goes over and finds three new faces in the Great Winfield’s office.
My solution to the current market,” the Great Winfield said. “Kids. This is a kids’ market. This is Billy the Kid, Johnny the Kid, and Sheldon the Kid.” The three Kids stood up without taking their eyes from the moving tape, shook hands, and called me “sir” respectfully.
“Aren’t they cute?” the Great Winfield asked. “Aren’t they fuzzy? Look at them, like teddy bears. It’s their market. I have taken them on for the duration.”
Winfield then describes how much money Billy the Kid is making in computer leasing stocks like Leasco Data Processing and Randolph Computer that he has heavily leveraged with bank borrowing....And the really spooky bit, for me anyway, SHALE:
...Sheldon the Kid waved his hand for recognition.And from the Electric Light Orchestra:
“This one will really take you back,” said the Great Winfield. “Sheldon’s Western Oil Shale has gone from three to thirty.”
“Sir!” said Sheldon. “The Western United States is sitting on a pool of oil five times as big as all the known reserves in the world – shale oil. Technology is coming along fast. When it comes, Equity Oil can earn seven hundred and fifty dollars a share.
It’s selling at twenty-four dollars. The first commercial underground nuclear test is coming up. The possibilities are so big no one can comprehend them.”
“Shale oil! Shale oil!” said the Great Winfield. “Takes you way back, doesn’t it. I bet you can barely remember it.”
“The shale oil play,” I said dreaming. “My old MG TC. A blond girl, tan from the summer sun, in the Hamptons, beer on the beach, ‘Unchained Melody,’ the little bar in the Village.”
“See? See?” said the Great Winfield. “The flow of the seasons. Life begins again. It’s marvelous. It’s like having a son! My boys! My Kids!”
The Great Winfield had made his point. Memory can get in the way of such a jolly market, that malaise that comes with the instantly gone, flickering feeling of déjà vu. We have all been here before.
“The strength of my kids is that they are too young to remember anything bad, and they are making so much money they feel invincible,” said the Great Winfield.
“Now you know and I know that one day the orchestra will stop playing and the wind will rattle through the broken window panes, and the anticipation of this freezes us. All of these kids but one will be broke, and that one will be the multi-millionaire, the Arthur Rock of the new generation. There is always one, and maybe we will find him.”...MORE
