In theContext of the New Trump Administration, Will Nuclear Stocks Experiences Surges? Essential Information for Investors.
In theContext of the New Trump Administration, Will Nuclear Stocks Experiences Surges? Essential Information for Investors.
Last week's election of Donald Trump has stirred up financial markets.
Equities have generally risen, although there are areas of vulnerability, such as real estate and international corporations that could be affected by Trump's proposed tariffs.
Treasury yields rose following the election, indicating that bond investors were concerned about increased deficits and the impact of tariffs under a new Trump administration, though bond yields have decreased in subsequent sessions.
A major topic of debate regarding the new administration is how its energy policy, which is likely to differ significantly from the Biden administration's, will affect the economy and the stock market. In particular, investors are curious about Trump's stance on nuclear energy, as the sector has gained attention recently after tech giants like Google, Microsoft, and Amazon have adopted nuclear energy to power their demanding AI data centers. Consequently, there's been a rise in nuclear stocks such as Nuscale Power (SMR -0.05%) and Oklo (OKLO 3.35%), which is backed by OpenAI CEO Sam Altman.
However, it's uncertain how nuclear stocks will be influenced by the Trump administration. To gain some insight, let's examine some comments from the president-elect.
Trump's views on nuclear energy
During his first term, Trump advocated for pro-nuclear policies, implementing an "all-of-the-above" energy policy, and his administration provided billions in loans for the construction of Plant Vogtle in Georgia and the failed Carbon Free Power Project in Idaho, which utilized Nuscale Power's small modular reactor technology.
In August, Trump announced at a rally that he would commission new reactors once his term began, and he has expressed interest in fast-tracking new energy infrastructure approvals. He also spoke positively about deploying "advanced small modular nuclear reactors" and praised their benefits over larger nuclear plants, citing "cost overruns."
He reiterated these opinions on Joe Rogan's podcast, expressing doubts about large-scale projects like Vogtle, stating they "get too big, and too complex and too expensive."
Toward the end of his first term, Trump issued an executive order promoting small modular reactors for national defense and space exploration.
He has also expressed reservations about the Biden Administration's Inflation Reduction Act, which included tax incentives for nuclear projects, but there's strong Republican support for it, as much of the funding was allocated to Republican districts.
On NuScale's recent earnings call, CEO John Hopkins expressed optimism regarding the Trump administration, stating, "I believe with President Trump, they'll aim for less regulations. I did speak with him previously, and he was pro-nuclear."
Implications for nuclear stocks
Trump's impact on the nuclear sector may be more constrained than investors anticipate, at least for small modular reactor technology companies like Nuscale and Oklo.
First, the technology is still in development, and even optimists predict deployment by the end of the decade at the earliest.
Moreover, the Biden administration has been supportive of nuclear energy, viewing it as a crucial component in the fight against climate change. Just last month, the administration chose to accept applications for up to $900 million in funding to support small modular reactor technology.
In simpler terms, the potential profits from an extremely pro-nuclear Trump administration may be limited since favorable policies are already implemented, and technological advancements seem to be the main challenge rather than regulation.
However, investors in Nuscale and Oklo, as well as those considering these and other nuclear stocks, should watch for upcoming Department of Energy appointments, such as the Nuclear Regulatory Commission, where Trump can appoint most Commissioners during his tenure, influencing the development and licensing of small modular reactors.
Over the long term, the future looks promising for nuclear stocks, given the support of tech giants and the incoming president, but investors may need to practice patience as deployment may not happen for several years, or until nuclear policy has an effect on major nuclear plants and the wider industry.
The rise in nuclear stocks, such as Nuscale Power and Oklo, could potentially be influenced by Trump's pro-nuclear policies and interest in small modular reactors. As Trump has expressed support for the technology and has announced plans to commission new reactors, this could lead to increased investment in the sector. Additionally, Treasury yields and financial markets are closely watching the Trump administration's energy policy and its impact on nuclear energy, as it could impact future financing opportunities and investment decisions regarding the sector.