NuScale Power Rises 76% in a Year: Should You Hold or Fold the Stock?

NuScale Power SMR shares have surged 76.3% in the trailing 12-month period, outperforming the Zacks Computer & Technology sector’s appreciation of 8.1% and the Zacks Electronics- Power Generation industry’s rise of 60.4%.The strong performance can be attributed to the high demand for electricity and clean energy, along with the increasing need for AI-powered data centers, which serve as a major driving factor.NuScale Power has been benefiting from growing interest from potential customers, especially from hyperscalers in the data center industry, for its small modular reactor (SMR) technology. This interest is driving more commercial engagement and confidence in the company’s future prospects.Can NuScale Power sustain its strong stock performance, given the rising demand for clean energy and AI-powered data centers?SMR Outperforms Sector,IndustryImage Source: Zacks Investment ResearchSMR Benefits From Rising Energy Demand and Data CentersNuScale Power is gaining strong momentum across various sectors, especially as energy demands continue to rise. The increasing energy demand, driven by sectors like data centers, which require continuous, reliable, and carbon-free energy, has been a major growth driver.Data centers are expected to triple their energy use over the next three years, accounting for 12% of U.S. electricity consumption by 2028. This growth trend presents a significant opportunity for NuScale Power, as its Small Modular Reactor technology offers consistent, carbon-free energy that can meet the increasing demands of hyperscale data centers.NuScale Power’s fourth-quarter 2024 revenues surged to $34.2 million from $4.6 million in the same quarter the previous year, driven by payments related to the RoPower project’s Phase 2 Front-End Engineering and Design in Romania. This milestone reflects progress in commercializing its small modular reactor technology.The company also made significant strides in the manufacturing and commercialization of its SMR technology, including progress with key partners like Doosan Interability and ENTRA1 Energy, which further solidified its position in the market.In December 2024, NuScale Power opened its Energy Exploration Center at The Ohio State University. The center aims to develop the next generation of nuclear professionals through hands-on learning and SMR simulations, reinforcing the need for skilled workers in the nuclear energy sector.SMR Benefits From Tech Giants’ Commitment to Nuclear EnergyNuScale Power continues to attract strong interest from major technology companies and infrastructure capital. Companies like Meta Platforms META, Microsoft MSFT, Alphabet GOOGL and Oracle have made substantial commitments to using nuclear energy, including SMRs, to meet its sustainability goals, which positively impacts NuScale Power’s market positioning.Microsoft’s commitment to nuclear energy has further validated the demand for SMRs in powering data centers and heavy industries. MSFT is also planning an $80 billion investment in fiscal 2025 to build AI-enabled data centers, contributing to the projected sixfold increase in U.S. power demand over the next 20 years.In December 2024, Meta announced its goal to seek up to 4 gigawatts of new nuclear power to help meet its AI and sustainability objectives. This highlights Meta’s commitment to securing reliable, clean energy for its operations.Companies like Google and Oracle are also showing interest in using SMRs for large-scale data centers, reinforcing the growing trend toward nuclear solutions for energy-intensive tech operations. As these organizations align their energy strategies with sustainable nuclear options, the demand for SMRs continues to gain momentum, positioning NuScale Power at the forefront of this emerging energy market.SMR Earnings Estimates Show Upward TrendFor 2025, the Zacks Consensus Estimate for loss is pegged at 41 cents per share, which has narrowed by 5 cents over the past 30 days. SMR reported earnings of 42 cents per share in the year-ago quarter.NuScale Power Corporation Price and Consensus NuScale Power Corporation price-consensus-chart | NuScale Power Corporation QuoteFind the latest EPS estimates and surprises on Zacks Earnings Calendar.SMR Stock is OvervaluedNuScale Power shares are currently overvalued, as suggested by its Value Score of F.In terms of the forward 12-month price/sales (P/S), SMR is trading at 65.82X, significantly higher than its median of 18.31X and the Zacks Computer and Technology sector’s 5.80X.Price/Sales (F12M)Image Source: Zacks Investment ResearchConclusion: Hold SMR Stock for NowNuScale Power’s advancements in SMR technology and its growing partnerships with tech giants and financial institutions position it as a key player in the future of sustainable, carbon-free energy.However, despite these innovations and collaborations, the company faces challenges in the highly competitive energy market, which includes the growing presence of renewable energy sources and regulatory hurdles. These factors could affect NuScale Power’s market positioning, even with its technological edge. SMR’s stretched valuation is also a concern.NuScale Power currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis Report NuScale Power Corporation (SMR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks