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.”
Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks
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.
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Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks
9. Oklo Inc. (NYSE:OKLO)
Number of Hedge Fund Holders: N/A
Highlighting investors’ enthusiasm about nuclear power companies like Oklo Inc. (NYSE:OKLO), Cramer 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.”
Oklo (NYSE:OKLO) is a company focused on designing and developing fission power plants to deliver reliable, commercial-scale energy. In addition to power generation, it also offers used nuclear fuel recycling services. In May 2024, the company went public through a special purpose acquisition company (SPAC), AltC Acquisition Corp., which is owned by Sam Altman, co-founder of OpenAI.
The company is positioning itself around the idea that nuclear waste contains enough energy to meet the projected energy demands of the U.S. for the next century. However, it faces several significant challenges. Despite its innovative approach, the company continues to burn cash and is unlikely to reach profitability in the near future. Its reactor design, while novel, still needs to prove its commercial viability, and Oklo has yet to deploy a reactor.
The company is targeting 2027 for the launch of its first plant at the Idaho National Laboratory in Idaho Falls. As of the third quarter, Oklo (NYSE:OKLO) reported using $24.9 million in cash for operating activities year-to-date, including a net loss of $63.3 million, which was partly driven by a $2.2 million increase in working capital due to lower accounts payable. Looking ahead, for the full year of 2024, it expects to use between $35 million and $45 million in cash for operating activities, along with a forecasted operating loss of $40 million to $50 million.
8. Quantum Computing Inc. (NASDAQ:QUBT)
Number of Hedge Fund Holders: 2
Talking about Quantum Computing Inc. (NASDAQ:QUBT), Cramer said:
“I’m also concerned about a company called Quantum Computing, $2.4 billion, with $400,000 in revenues in the last 12 months and again, very big losses.”
Quantum Computing (NASDAQ:QUBT) offers portable quantum machines, including Dirac systems and quantum random number generators, along with quantum authentication solutions for enhanced cybersecurity. Despite a significant stock increase of over 1,900% in 2024, this surge in value is largely disconnected from the company’s underlying business performance. The company currently reports a modest revenue of $386,000 over the past twelve months, a figure that remains relatively small in comparison to the company’s ambitions.
Like many quantum computing firms, the stock is considered high-risk, with its future largely influenced by technological advancements, costs, and the potential for commercial sales of quantum computers in the coming years. However, Quantum Computing (NASDAQ:QUBT) continues to face challenges, having reported an operating loss of $25 million over the last twelve months, highlighting the financial hurdles it must overcome.
7. D-Wave Quantum Inc. (NYSE:QBTS)
Number of Hedge Fund Holders: 6
Cramer expressed skepticism about D-Wave Quantum Inc. (NYSE:QBTS) as he remarked:
“I am wary of D-Wave Quantum, a $2.2 billion company with $9 million in revenues over the last 12 months and very big losses.”
D-Wave Quantum (NYSE:QBTS) offers quantum computing systems, software, and services, including the Advantage quantum computer and the Leap cloud platform. It also provides D-Wave Launch, a service to assist enterprises in implementing quantum solutions. The company’s financial performance has been challenging. For the third quarter of 2024, it reported a 27% decline in revenue compared to the previous year, with earnings falling to $1.9 million.
This marked a decrease from $2.5 million in the first quarter and $2.2 million in the second quarter of 2024. Alongside the revenue drop, the company’s net loss widened to $22.7 million in Q3 2024, compared to $17.3 million in Q1 and $17.8 million in Q2 of the same year. However, in response to concerns about the future of quantum computing, especially following comments from Nvidia CEO Jensen Huang, the company’s CEO Alan Baratz expressed strong disagreement.
Baratz asserted that Huang was “dead wrong” about the prospects of quantum computing, emphasizing that D-Wave Quantum’s (NYSE:QBTS) systems are already in use by companies like Mastercard and Japan’s NTT Docomo in production environments. Unlike other approaches to quantum computing, such as the gate-based model, which Baratz acknowledged might take decades to be fully realized, D-Wave’s annealing approach can be applied today to benefit businesses in real-world operations.
6. Rigetti Computing, Inc. (NASDAQ:RGTI)
Number of Hedge Fund Holders: 7
Cramer discussed Rigetti Computing, Inc. (NASDAQ:RGTI) stock’s parabolic move and highlighted its meager revenue in the past year.
“But then for example, when I look at Rigetti Computing, it’s a $5.6 billion company, professes to be a leader in quantum computers and superconducting equipment, I grow concerned. Rigetti is a multiple-year money loser with just $11.9 million in revenues in the last 12 months.
This stock was at 66 cents four months ago. Now it’s at 20 bucks, up over 30% just today. Its big break occurred at the end of November when it sold 50 million shares at two bucks. The stock was off the races ever since then. Hey, it’s a quantum GameStop, okay?”
Rigetti Computing (NASDAQ:RGTI) is a company focused on designing and constructing quantum computers and superconducting quantum processors. Recently, the field of quantum computing has garnered significant attention, and as a result, stocks of companies in this space, including Rigetti, have experienced substantial growth. Over the past year, the company stock has surged by more than 1,600%.
Despite the surge in its stock price, there is a notable gap between the company’s market capitalization and its actual financial performance. Its revenue for the third quarter was reported at $2.4 million, a decline from $3.1 million in the same period of 2023. Additionally, the company faced operating expenses of $18.6 million in Q3, which appears relatively small for a company at the forefront of such groundbreaking technology.
Additionally, Andrew Left of Citron Research expressed a bearish view, suggesting that buying shares in Rigetti Computing (NASDAQ:RGTI) based on the success of companies like Google in quantum computing is misguided. Left argued that the hype around quantum computing might fade, and investors could be left questioning the company’s ability to truly compete in the space, especially given its recent equity sales at low prices and the likelihood of further dilution.
5. 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 (LWMR) nuclear power plants. One of the main aspects of its operations is its small modular reactor (SMR) 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 (UAMPS) 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.
4. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
While Cramer mentioned Constellation Energy Corporation’s (NASDAQ:CEG) advances related to nuclear power, he mentioned that the stock is ahead of itself.
“Right now, there are two utilities that generate a lot of nuclear power, Vistra and Constellation Energy, the latter of which just got a big contract with the feds, $1 billion, to expand a nuclear site. The big utilities are frantically trying to meet power demand generated by the data center revolution. I think these two stocks are now way ahead of themselves. They trade like they’ll be able to build many nuclear reactors next to the currently approved ones because siting won’t be difficult.
Oh, that’s true but building them will be. It takes ages to construct one of these things, big overruns. Constellation’s reopening a decommissioned Three Mile Island plant with Microsoft signing a contract for 20 years worth of power. That does sound great, but I think the process of restarting a dead nuclear power plant won’t be easy. But hey, at least Constellation and Vistra’s real, even if their stocks have gotten overextended.”
Constellation (NASDAQ:CEG) is a U.S. energy company that generates and sells electricity, utilizing a diverse mix of nuclear, wind, solar, natural gas, and hydroelectric resources. It has a significant presence in the nuclear energy sector, as highlighted by its performance in the third quarter when it generated more than 41 million megawatt-hours from its nuclear plants.
In January, the company secured a big contract with the U.S. government, being awarded $1 billion in agreements to supply nuclear power to federal agencies. According to the U.S. GSA, the deal, which will start on April 25, is set to provide more than 10 million megawatt-hours of electricity over a 10-year period. The agreement also offers Constellation the opportunity to extend the operational life of its current nuclear plants, while allowing for investments in new equipment and technology to boost output by around 135 megawatts.
Constellation’s (NASDAQ:CEG) nuclear energy capabilities have recently been further strengthened by a long-term power purchase agreement with Microsoft. In 2024, Microsoft entered into a 20-year deal with the company to help fund the revival of the Three Mile Island nuclear plant, located near Harrisburg, Pennsylvania. This agreement is integral to the development of the Crane Clean Energy Center, which will serve to generate 835 megawatts of carbon-free energy. This energy will be used to power Microsoft’s data centers within the PJM interconnection.
3. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
Cramer discussed how GE Vernova Inc. (NYSE:GEV), despite being “the most important builder of nuclear plants”, is bearish about the near-term prospects of the technology.
“I will say that the most important builder of nuclear plants in this country, GE Vernova is about as bearish as the promoters are bullish. I’ve tried to coax CEO Scott Strazik to be more positive on the prospects, but he won’t. After all the engineering hurdles, cost overruns, and balance sheet damage associated with his plants, he doesn’t expect anything commercially viable for about a decade so I don’t think you wanna be in any of these nuclear stocks for too long.”
GE Vernova (NYSE:GEV) operates as an energy company and is positioning itself as a key player in the nuclear energy space. CEO Scott Strazik recently spoke about the company’s approach to nuclear energy during its last earnings call, highlighting both existing infrastructure and future growth opportunities.
Strazik noted that the company’s equipment is already installed in 65 nuclear plants in the United States alone. He pointed out that upgrades to these existing plants could add up to 3 gigawatts of additional nuclear capacity. As the nuclear power industry looks ahead to the 2030s, Strazik expressed optimism, stating that the sector is poised to add substantial capacity, with a focus on validating and advancing the technology over the next decade.
Furthermore, GE Vernova (NYSE:GEV) is targeting substantial growth in the small reactor market. According to CNBC, the company aims to generate more than $2 billion in annual revenue from small reactors by the mid-2030s. The company projects a demand for up to 57 small reactors across its target markets, including the U.S., Canada, the United Kingdom, and Europe, by 2035.
2. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 97
Cramer mentioned Vistra Corp. (NYSE:VST) and said:
“Right now, there are two utilities that generate a lot of nuclear power, Vistra and Constellation Energy, the latter of which just got a big contract with the feds, $1 billion, to expand a nuclear site. The big utilities are frantically trying to meet power demand generated by the data center revolution. I think these two stocks are now way ahead of themselves. They trade like they’ll be able to build many nuclear reactors next to the currently approved ones because siting won’t be difficult.
Oh, that’s true but building them will be. It takes ages to construct one of these things, big overruns. Constellation’s reopening a decommissioned Three Mile Island plant with Microsoft signing a contract for 20 years worth of power. That does sound great, but I think the process of restarting a dead nuclear power plant won’t be easy. But hey, at least Constellation and Vistra’s real, even if their stocks have gotten overextended.”
Vistra (NYSE:VST) is a prominent electricity retailer and power generation company. In March 2024, it acquired Energy Harbor Corp., adding 4,000 megawatts of nuclear power and 1 million retail customers to its zero-carbon generation and electricity business. Later, the company took a 15% minority stake in Vistra Vision, boosting its nuclear capacity by 970 megawatts and expanding its solar and energy storage capacity by 200 megawatts.
Additionally, Vistra (NYSE:VST) management has said that the company is in early talks with hyperscale data center operators about potential nuclear power uprates and new projects. The company also received important regulatory approval to extend the operational lifespan of the Comanche Peak Nuclear Power Plant. This approval allows the plant to remain operational until 2053, extending its original license by an additional two decades.
The Comanche Peak facility consists of two units, with a combined capacity of 2,400 megawatts. Since its opening in 1990, it has generated over 582 million megawatt-hours of clean, emission-free electricity.
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Cramer highlighted that Alphabet Inc. (NASDAQ:GOOGL) has a facility for quantum computing and went on to say that it is not a reason to invest in the stock.
“Alphabet has a facility dedicated to quantum computing. This is super fast computing using superconductors that require a specialized computer environment based in part on cryogenic technology. Sounds promising, the others burn too hot, right, the regular data centers. But it’s not a reason to buy Alphabet because it’s nothing that’s ready at scale. I like Alphabet, own it for the Charitable Trust, but that’s because we like their dominance in Search, progress in YouTube, and incredible strength of Google Cloud services, well ahead of what people think. Quantum computing is just a long-term project.”
Alphabet (NASDAQ:GOOGL), a leading technology company, recently introduced a new quantum computing chip named Willow, which it claims could revolutionize the field. According to the company, Willow represents a significant breakthrough in the world of quantum computing. The chip is designed to solve complex problems that would typically take conventional computers 10 septillion years to complete.
Willow was created in one of the few specialized facilities globally, located in Santa Barbara, California. This state-of-the-art fabrication facility was specifically built to accommodate the complex needs of developing quantum computing hardware. One of the main challenges in quantum computing has been its high error rates, particularly as the number of qubits increases. However, the company claims Willow could significantly reduce these errors as it scales up, thus overcoming a major hurdle in the field.
Despite these promising developments, the application of quantum computing remains speculative, as there are no real-world uses for the technology at present. Alphabet (NASDAQ:GOOGL) has worked on Willow for over a decade, but experts acknowledge that the practical commercial use of quantum computing remains many years away. According to the head of Google’s Quantum AI lab, Hartmut Neven, the technology will likely not be ready for real-world applications before the end of the decade. Neven said while the breakthrough marks an important step in the progress of quantum computing, its commercial impact is still distant.
While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOGL) 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 GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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