Key Points
Interest in nuclear energy is sharply on the rise now.
NuScale Power is preparing to hit a major catalyst.
NuScale Power (NYSE: SMR) is a nuclear energy stock with a market capitalization under $4 billion. Experts, however, believe the company is targeting a growth opportunity valued in the trillions of dollars.
According to analysts from Bank of America, nuclear energy could hold "the answer to the world's power shortages." The bank predicts nuclear energy generation capacity will triple by 2050, with investment reaching $3 trillion over the next 25 years alone. NuScale's small modular reactor (SMR) systems should capture a slice of that increased spending.
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"Amid surging electricity demand, driven in part by the rise in AI/data centers, nuclear energy offers a potential solution," a report from Bank of America observes. "And new advancements in technology may now make the tipping point in sight for small modular reactors (SMRs) to reshape nuclear energy supply chains over the next decade."
NuScale stock won't have to wait decades to benefit, however. There is one growth catalyst on the way that, if achieved, should send NuScale shares soaring, potentially before 2026 concludes.
This catalyst could send NuScale Power stock soaring
NuScale stock is not for the faint of heart. Shares have fallen 40% in value this year. In 2023, shares sank as low as $2, only to surge above $50 in 2025. Today, shares hover just below $10.
In short, this is a volatile stock. And it's not hard to see why. While NuScale is the only company approved by regulators to build an SMR system, it has never actually successfully built one. In 2024, NuScale faced a major cancellation. Cost estimates continue to rise, so much so that the customer ultimately pulled out.
"The estimated costs of the project rose to $4.2 billion in 2018, then $6.1 billion in 2020, and finally $9.3 billion in 2023, after it was scaled down to 462 MW in 2021. In the end, the costs were clearly too high," reports UtilityDive.
Image source: Getty Images.
Years following that project cancellation, NuScale is once again on the verge of starting a major project. This one is a 6 GW system designed for the Tennessee Valley Authority, a utility operating on the Eastern U.S. coast. NuScale's management team believes a power purchase agreement (PPA) should be signed by the end of 2026.
If true, expect NuScale stock to surge. That's because a PPA essentially locks the customer into buying power from the SMR system at a predetermined price for years, if not decades to come. That financial commitment would finally allow NuScale to break ground, begin construction, and start generating meaningful revenue.
The market, for now, remains skeptical. Neither party has agreed to anything binding. But if a PPA is signed this year, it could set NuScale up to generate more than $1 billion in revenue by 2030 from this project alone, though exact cost and revenue expectations have yet to be released.
If there are delays to this deal, NuScale may be forced to dilute shareholders again to remain financially solvent until one of the deals in its pipeline gains real-world traction. But if things move forward as planned -- a big "if" given NuScale's history -- it's not hard to see the company's market cap soaring significantly as the market erases the discount associated with its ability to execute on its project pipeline.
Bank of America is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.