Amazon has shown significant interest in the nuclear energy sector. On Wednesday, shares of NuScale Power, a company that develops small modular reactors (SMRs), experienced a notable surge. This rise was linked to reports suggesting Amazon’s interest in using such reactors to support the energy needs of its data centers. The increase in NuScale’s stock value was further fueled by a short squeeze, which occurs when investors who had bet against the stock rush to cover their positions in light of potentially favorable news.
The stock reached a new all-time high during morning trading, with a 31.6% increase noted by 12:36 p.m. ET. News related to Amazon also positively affected shares of Fluor, a significant investor in NuScale, which observed a 7.2% increase.
Amazon announced it had signed three agreements focused on nuclear energy projects, although it did not specify NuScale’s participation in these agreements. The company expressed an interest in exploring carbon-free energy sources like nuclear power and revealed plans to invest $500 million in X-energy, a private alternative energy company that is a potential competitor to NuScale. Additionally, Amazon signed an agreement with Dominion Energy to explore the development of a new SMR project.
Despite this announcement not having direct implications for NuScale Power, it is noteworthy that NuScale is currently the only U.S. company holding a design license for SMRs from the Nuclear Regulatory Commission. Previously, NuScale encountered a setback when a planned SMR project in Idaho was canceled last year. By the end of September, 24% of NuScale’s shares were sold short, which set the stage for the short squeeze following Amazon’s announcement, as investors anticipated a broader adoption of nuclear power and SMRs. By noon, NuScale’s trading volume had already significantly surpassed its daily average.
While investors are responding positively to the news, some caution remains due to the challenges SMRs face and NuScale’s current limited revenue generation. Amazon’s move toward nuclear energy follows a similar announcement from Alphabet earlier in the week, highlighting growing interest in this sector. Nonetheless, as SMRs vie for mainstream adoption, the competitive landscape presents uncertainty for NuScale, which may continue to see volatility influenced by industry news.
