Oklo Inc (NYSE: OKLO) has soared more than 70% lately as big tech companies have turned to nuclear power amidst an AI-driven increase in energy demand.
Shares of the fission technology company are reacting to sizable investments that Google, Microsoft, and most recently Amazon have announced in nuclear to power their data centers.
Additionally, the nuclear fuel recycling firm secured DOE approval this week for its Conceptual Safety Design Report (CSDR) for the Aurora Fuel Fabrication Facility at Idaho National Laboratory.
The recent rally in Oklo stock has left many questioning if it’s already too late to invest in it. But a better question may be whether it’s worth investing at the moment in the first place.
Think twice before investing in Oklo stock
Oklo does have the potential to transform data centers as it leverages recycled nuclear waste to minimize its dependence on conventional power grids.
The New York-listed firm is all the more impressive considering notable names like Sam Altman and billionaire Peter Thiel are invested in it. Still, there are several reasons why Oklo stock could fail to sustain its recent gains.
For one, it merged with a special purpose acquisition company to go public in May – and SPACs are known to see a sharp decline following an initial surge.
Renewable energy SPACs have returned a disappointing negative 84% on average over the past 15 years, as per a recent study conducted by the University of Florida. That’s the first red flag when it comes to investing in Oklo shares.
Oklo may not generate revenue anytime soon
Oklo is expected to take another two to three years before its first plant turns functional.
The California-based company is broadly expected to remain a pre-revenue business until 2027.
Therefore, it may struggle with liquidity and even dilute shareholders amidst continued investments in capital expenditures in the coming years.
All in all, Oklo Inc is a nuclear technology company that looks exciting on the surface, but it may be a bit too early and, quite frankly, significantly risky, to invest in it at writing.
Investors should instead consider building a position in more established names like Constellation Energy and Dominion Energy to capitalize on the rising demand for nuclear power.
After all, these are the ones that the big tech has turned to for nuclear power.
Nonetheless, Wall Street currently rates Oklo shares “overweight”, but they find them fairly valued at about $11 – sharply below $15.60 where OKLO is trading at writing.
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