By Mackenzie Tatananni
Oklo stock surged in premarket trading Thursday after Wedbush analysts initiated coverage with an Outperform rating, citing the nuclear-power startup's "momentum into 2025" and its ability to benefit from the artificial-intelligence boom.
Analysts led by Daniel Ives set a target of $26 for the price. The stock was up 5.6% to $19.40.
The decision to rate Oklo at Outperform, the firm wrote, came in part from the company's "attractive build, own, and operate business model," which differs from that of its competitors. "The company itself is selling power, not the reactors, directly to customers under long-term contracts which in turn provide long-term recurring revenues and a streamlined regulatory pathway," Wedbush wrote.
On Wednesday, Oklo announced a partnership to sell energy to Switch, a privately held company that operates data-center campuses. Under the terms of the deal, Oklo will develop and operate power plants across the U.S., with a goal to deploy 12 gigawatts of power through 2044.
Wedbush noted that the artificial intelligence boom is driving significant demand for clean energy, "putting OKLO in a great position to capitalize on this elevated demand."
"With the AI revolution underway, the industry will need roughly a tenfold increase in computing power by 2030 which takes up a tremendous amount of energy," the analysts wrote.
Among the most promising initiatives is Oklo's Aurora micro-reactor, Wedbush argued. The proposed design is fueled by high-assay low-enriched uranium, or HALEU, "which has proven itself as a superior fuel" relative to traditional low-enriched uranium.
Oklo made its debut on the New York Stock Exchange in May. The start-up went public through a merger with AltC Acquisition Corp., a special-purpose acquisition company headed by OpenAI CEO Sam Altman.
Wedbush acknowledged the neck-and-neck competition in the market for small modular reactors, describing timelines to get power to the ground as an "arms race."
Despite these challenges, the firm believes Oklo is a step ahead of the competition. It doesn't hurt that the company is "backed by a major player in the AI space," either, as Wedbush put it.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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(END) Dow Jones Newswires
December 19, 2024 09:39 ET (14:39 GMT)
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