The artificial intelligence (“AI”) boom is leading to the massive buildout of data centers, with giants like Microsoft (MFST) and Meta (META) attempting to leapfrog their rivals by building the infrastructure necessary to support their AI operations.

However, this massive buildout is only one part of the complex challenge posed by the AI arms race.

Data centers are extremely power hungry and require constant access to reliable energy. They’re forecast to consume as much as 12% of total electricity demand in the U.S. by 2030.

With AI data centers straining the U.S. energy grid, many companies, and even the U.S. government, are looking into alternative energy sources such as nuclear as a possible long-term solution to growing power demand. 

Based on estimates, there will be as much as $350 billion invested into the nuclear industry through 2050 as new reactors and small modular reactors (“SMR”) are built over the next decade.

With this context in mind, the resurgence of nuclear power is poised to unlock opportunities for companies in the industry.

That’s why Oklo (OKLO), a nuclear technology firm founded in 2013, has invited significant investor enthusiasm over the past year.

Oklo specializes in the design of SMRs, with its founders aiming to create a new generation of reactors that utilize liquid sodium, instead of water, as a coolant. 

The company has gained traction over the past decade plus due to the promise that its reactors bring. It has even been backed by OpenAI CEO Sam Altman who was instrumental in taking it public in 2024. 

With the AI arms race intensifying, the company is positioning itself as a supplier of energy to power hungry data centers. Due to the growing demand for energy and the potential for Oklo to solve these problems with its SMRs, the company has become a favorite for many investors.

So far this year, Oklo’s stock has risen by more than 450%, valuing the company at more than $18 billion.

This is despite the fact that Oklo has yet to generate any revenue, and doesn’t hold any licenses to operate reactors.

Its most recent attempt to apply for a license to build a sodium-cooled reactor was rejected by the U.S. Nuclear Regulatory Commission (“NRC”) in 2022. 

While Oklo has announced the completion of the NRC’s pre-application readiness assessment for Phase 1 of the combined license application for its first commercial Aurora powerhouse, the lack of a license to build a reactor has raised questions among some investors.

With growing fears of an AI bubble as investors learn of circular deals between AI stalwarts, Oklo has come under more scrutiny as the market assesses the risk of the business.

Oklo’s stock has fallen around 20% over the past week.

Still, the market as a whole still has high hopes for this business.

This can be seen through the Embedded Expectations Analysis (“EEA”) framework. The EEA starts by looking at a company’s current stock price, and calculates what the market expects from future cash flows.

Comparing that with Valens’ own cash-flow projections, it can tell investors how well a company has to perform in the future to justify what the market is paying for it today.

Despite being a business that’s yet to generate revenue, let alone positive returns, the market is expecting Oklo to generate $1.1 billion in Uniform earnings by 2029.