We recently compiled a list of the Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks. In this article, we are going to take a look at where NuScale Power Corporation (NYSE:SMR) stands against the other nuclear power and quantum computing stocks.
Jim Cramer, host of Mad Money, recently cautioned investors about the risks of speculating in sectors like nuclear power and quantum computing, suggesting it could take a long time before these fields generate meaningful returns. While Cramer acknowledged the optimism that accompanies the start of each new year, he pointed out that sometimes the enthusiasm surrounding certain industries is misplaced.
“This year, I see two themes that I want to caution people about: nuclear power and quantum computing. Both have promise, someday, but that day is not, just not near enough to justify the current valuations for these stocks.”
He clarified that while he does not view quantum computing as a hoax, he considers the current expectations surrounding the technology to be overly ambitious. The market, according to Cramer, is setting a low bar for progress in this area.
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“Look, I believe in nuclear power, but when GE Vernova, the company that arguably has the most to gain from it, says discouraging things about an uptick in commercial nuclear power coming any time soon, when quantum computing seems very much in its infancy, well, I fear people will get hurt speculating on even the biggest companies, let alone the smaller ones.”
The outlook for quantum computing became more uncertain last week when Nvidia CEO Jensen Huang stated that “very useful” quantum computers are at least a decade away. During a Q&A at Nvidia’s Consumer Electronics Show Financial Analyst event, Huang suggested that 15 years might be an optimistic estimate, while 30 years could be more realistic. This timeline left little room for optimism among investors who had hoped for quicker breakthroughs.
Cramer acknowledged the speculative nature of these sectors but advised investors to be cautious and realistic about the potential for short-term gains.
“You can speculate of course, but please understand that, like at all New Years, the animal spirits are in play for a few stocks and I don’t want you to be trampled by wayward bulls with visions of riches in front of their greedy eyes. You own Rigetti?… Take some gains and then go out and buy yourself a nice cashmere sweater.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A Nuclear power plant with all its safety & security protocols in place.
NuScale Power Corporation (NYSE:SMR)
Number of Hedge Fund Holders: 18
Cramer expressed worry about companies like NuScale Power Corporation (NYSE:SMR) as he said:
“When it comes to nuclear power over-enthusiasm, we’ve seen some of these smaller companies that offer alternatives to the current plants, they worry me. Companies like Oklo with nuclear fission capabilities, NuScale Power with small form factor technology, they’re exciting, but they’re also years from developing anything meaningful. Or as my friend Michael Cembalest. chair of the Market and Investment Strategy group at J.P. Morgan wrote in his… 2025 outlook, ‘What nuclear renaissance? Wake me when we get there.”
NuScale Power (NYSE:SMR) is a company focused on designing modular light water reactor nuclear power plants. One of the main aspects of its operations is its small modular reactor design, which became the first of its kind to be certified by the U.S. Nuclear Regulatory Commission. Despite its progress, the company has faced significant challenges. In late 2022, the Utah Associated Municipal Power System decided to terminate its agreement with the company.
This agreement, which had been in place since 2015, had originally outlined plans to construct twelve reactor modules with an expected operational start by 2023. However, as the estimated costs of the project ballooned from an initial $3 billion to $9.3 billion, UAMPS chose to end its commitment, leading to the cancellation of NuScale’s first planned small modular reactor project. The termination resulted in a $50 million charge for the company.
The year 2023 also brought further financial challenges for NuScale Power (NYSE:SMR). Soaring expenses forced the company to cancel its plans to build six nuclear reactors in Idaho. The company’s financial struggles were visible in its quarterly reports for 2024, where it reported decreasing revenue: $1.4 million in the first quarter, $1.0 million in the second quarter, and $0.5 million in the third quarter. The company also reported significant net losses during the same periods, with losses of $48.1 million in Q1, $74.4 million in Q2, and $45.5 million in Q3.
Overall SMR ranks 5th on our list of the nuclear power and quantum computing stocks Jim Cramer recently talked about. While we acknowledge the potential of SMR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.