Artificial intelligence (AI) and electrification are driving the world to need more energy. One form of electric power generation that is coming back into vogue is nuclear power. Large companies are making commitments to buy electricity from nuclear power plants, while utilities are extending the contracts for existing facilities and planning to bring new power sources to life in the next few years.

One stock that has benefited from this changing nuclear energy sentiment is NuScale Power Corporation (SMR 0.08%). The start-up is working on small modular reactor technology to license to third parties, hopefully to democratize the technology. Shares of the stock are up 250% in the last year, beating the broad market averages. But is it a buy right now?

Betting on new nuclear energy developments

Small modular reactors are almost self-explanatory. Unlike the traditional large nuclear power plants, these are smaller systems that can (theoretically) be made more efficiently by combining a bunch together or using one system for a small energy need. Using similar technology to traditional power plants, NuScale Power wants to help utilities improve on the capital intensity a nuclear power plant takes to build, which can be a daunting proposition.

So far, it has not built any actual reactors, but it is the first and only company to get approval from the Nuclear Regulatory Commission (NRC) for a small modular design. This occurred in 2023, with a recent approval happening for the same design but just at a different electricity output. The company does not have any customer orders yet, but management believes one will arrive by the end of 2025, given that it is fully approved with its designs. It is also studying an old coal power plant in Romania to see about the feasibility of turning it into a nuclear power facility.

Canceled projects, delayed timelines

There’s a lot of excitement about NuScale Power right now. Spending on energy is well over $1 trillion every year just in the United States. If NuScale Power can commercialize a breakthrough technology in electricity generation with its small modular reactors, there could be enormous revenue potential.

The problem is, no major customers have committed to a project yet. It used to have a project planned with a Utah utility that started in 2015. However, due to major cost overruns and delayed timelines, the utility canceled the project in 2023. This is not a good sign for the viability of small modular reactors. Companies that design legacy nuclear power systems with proven viability still struggle to find utilities willing to invest in nuclear energy projects. A totally unproven technology is going to be a hard ask for utilities and their shareholders to risk.

SMR Revenue (TTM) data by YCharts.

Is NuScale Power stock a buy?

Today, after going up so much in the past year, NuScale Power stock trades at a market cap of $11 billion. Even though it generates a bit of revenue from the study in Romania, the company can generally be considered a pre-revenue start-up with no product ever sold to customers. It has revenue of $49 million and $98 million in negative free cash flow over the last 12 months.

The company is consistently raising money from capital markets, too. Its shares outstanding keep climbing as it has to raise money to stem its major cash burn. Rising shares outstanding dilutes shareholders, which will be a headwind to long-term returns. It is unclear whether the company will have a viable project contract signed anytime soon, and even if a project is signed, it takes many years for a nuclear power plant to get built, modular or not.

Even if a project gets planned, the stock is already pricing in this growth. At a market cap of $11 billion, the company needs to eventually be generating billions of dollars in revenue in order to make an adequate return for shareholders. Add it all up, and NuScale Power stock looks like a highly risky stock that investors should keep out of their portfolios right now.

Nuclear power is all the rage right now. NuScale Power (SMR 9.45%) has a market cap of $11 billion, and its stock is up 360% in the last 12 months. Hype is growing for this resurgent energy solution to help match demand from data centers and artificial intelligence, which are growing like gangbusters.

However, risks abound for investors in this pre-revenue stock with a market cap above $10 billion. Here are two other industrial stocks I predict will be worth more than NuScale Power 10 years from now.

Rocket Lab’s strong growth

First up, we have Rocket Lab (RKLB 4.49%), which has around the same market cap as NuScale Power. The first advantage Rocket Lab has over NuScale Power is the fact that it actually generates revenue. That’s not a high bar, but a clear distinction that needs to be made. It is a disruptive rocket launch and space systems company nipping on the heels of SpaceX’s dominant market share in the industry.

With the Electron rocket, Rocket Lab regularly performs trips for commercial customers and the United States government, executing 59 successful launches and having 31 planned missions currently in its pipeline. It is the only company besides SpaceX to consistently launch payload rockets for customers, which they pay a pretty penny for.

Besides rocket launches, Rocket Lab is working to build the systems that companies actually launch into space. This includes communication systems, solar panels, and payload vehicles. Over the long term, it is aiming to build its own constellation of satellites, although what it aims to do with these satellites is unclear.

In the future, Rocket Lab will debut its Neutron rocket system, which is much larger than the Electron, translating into higher revenue per launch. Today, the company generates $466 million in revenue. Over the next few years, Rocket Lab has a chance to greatly grow its sales with the debut of the Neutron, expansion of its space systems, and working through its current product backlog of over $1 billion. This will get the company on a trajectory to be a much larger stock than NuScale Power in 10 years.

Rivian’s comeback potential?

A second stock that will be larger than NuScale Power in 10 years is Rivian Automotive (RIVN 2.46%). This is a fallen angel in the electric vehicle space aiming to get its mojo back with new product launches. The stock is down 92% from all-time highs after its much-hyped initial public offering (IPO).

Rivian debuted in the electric vehicle sector with premium trucks and SUVs. This limited its addressable market. Stagnating deliveries to customers have followed. Reviews say it has a great car, just not one for a wide audience that can afford a vehicle that costs upwards of $100,000.

Next year, it is aiming to launch the R2, a mid-size SUV with a much more affordable cost of $45,000. This should greatly increase Rivian’s annual deliveries to customers, which are currently hovering below 50,000. Without this scale, Rivian will struggle to generate positive cash flow. Free cash flow has improved in recent years but was negative $1.86 billion over the past 12 months.

A scaled-up Rivian Automotive can grow its annual revenue from $5 billion to between $15 billion and $20 billion, and eventually higher over the long term, with vehicles that appeal to mass audiences. Profit margins will be slim, as with all automotive businesses, but this should lead to at least $1 billion in annual earnings (an approximate 5% margin at $20 billion in revenue), which will easily help it obtain a larger market cap than NuScale Power in 10 years.

RKLB Revenue (TTM) data by YCharts

Why most stocks will be worth more than NuScale Power in 10 years

Being larger than NuScale Power in 10 years will be simple. It may look like a large company today with a market cap of over $11 billion, but this is a pre-revenue company. All of its revenue today is from contracts to plan on building its products; they come with no positive unit economics and can be considered a wash from costs.

It generates zero dollars in revenue today. If its plans for nuclear energy development and its small modular reactors come along on schedule, it will not generate any revenue until 2030. Even so, it will probably be negligible revenue, given how its projects are essentially tests for the modular technology. It has not been proven yet that this technology can work economically or much better than large reactors. A previously committed project in Utah was canceled because of delays and cost overruns.

NuScale Power talks a big game, but it keeps kicking the can down the road when it comes to actually building and deploying a product. I don’t expect this to change over the next 10 years this is a dangerous stock to buy and one headed much lower in the years to come. For this reason, stocks such as Rivian and Rocket Lab are better bets and should be larger than NuScale Power in market capitalization 10 years from now.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.

The nuclear energy sector has been a winner across the very recent past, following Wednesday’s news that an important company in the industry had been tapped for an upcoming government project.

Centrus Energy (LEU 0.20%) wasn’t that company, but it’s a key supplier to the enterprise that’s at the heart of the project. Additionally, Centrus was the subject of a bullish new analyst note. With these tailwinds at its back the company’s share price had heated up by nearly 11% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.

The right supplier at the right time

The company bagging the contract was Centrus’ business partner, next-generation nuclear energy specialist Oklo, which is on tap to build and operate one of its facilities to power Eielson Air Force base in Alaska.

That’s also a win for Centrus, as it is a supplier of the high-assay low-enriched uranium (HALEU) that will fuel Oklo’s powerhouse. The two companies have a memorandum of understanding (MOU) in place for the supply of the fuel.

While most of the investor excitement following the project’s announcement was directed at Oklo, Centrus also received a boost due to the relationship with its peer. Additionally, becoming a crucial supplier to a branch of the military will greatly help boost Centrus’ status as a go-to nuclear energy supplier.

A good start to the week

Even before Oklo’s news hit the headlines, Centrus was already on a bullish path. On Monday, Evercore ISI analyst Nicholas Amicucci reiterated his outperform (i.e., buy) recommendation on the stock, and his $145-per-share price target. As of press time, there was no word on whether the pundit had updated his take on Centrus following the Oklo development.

Nuclear energy is enjoying quite the sudden revival in the U.S. and as long as it follows an upward trajectory, Centrus is sure to benefit from it. This is undoubtedly a stock to watch.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.