Artificial Intelligence has been perhaps the biggest buzzword for megatrends of 2024. The companies tied to AI have seen their stocks surge. Some of these stocks have pulled back handily from their highs but the gains in 2024 have been more than impressive. So, what happens when investors hear about a stock that is “under the radar” in the AI space? Oklo Inc. (NYSE: OKLO) is that company!
OKLO was initiated in coverage by Dan Ives of Wedbush Securities with an Outperform rating along with a $26 price target. If Ives is right on the company’s ability to win on the AI-theme’s exponential power growth, then that’s just over 40% of upside from the prior $18.38 close.
Oggonomics always reminds its readers and investors that no single analyst report should ever be the sole basis to buy or sell a stock. That decision to buy or sell (or hold or short sell) is up to each investor and the decision should be made with a financial advisor. And there are of course no assurances that any of the price predictions and the scenarios that back up any analyst calls will actually come to fruition.
Oklo is considered to be an emerging and advanced nuclear technology company. It has only been public since May of 2024 and came public via a merger with AltC Acquisition Corp — a SPAC headed by OpenAi CEO Sam Altman.
Ives sees a strong momentum heading into 2025 and sees it benefitting from the AI boom. Several more issues are cited:
- OKLO has an attractive business model to build, own and operate
- It is selling the power rather than the reactors to clients
- its contracts are to be long-term, good for recurring revenues and visibility
- a streamlined regulatory path
- and the industry sees a tenfold increase in computing power by 2030
- sees it being helped by being tied to an AI-leader (OpenAI)
Another key benefit is that Oklo’s Aurora micro-reactor has a proposed design to be fueled with high-assay low-enriched uranium (HALEU) that has been considered to be a superior fuel over the traditional low-enriched uranium reactors. Those nuclear power plants are shown to run on nuclear waste to provide clean, reliable, and affordable energy at scale.
The Wedbush call does acknowledge risks in this emerging micro-reactor space. It’s considered an arms race to who can get contracts and installations set up the fastest.
Oklo just this same week signed a pact with Switch to power its AI, cloud and enterprise data centers. The announcement was for a non-binding Master Power Agreement deploy 12 gigawatts of Oklo Aurora powerhouse projects. The length of the deal should indicate how and why these companies will have visibility once it’s all up and running — the pact is through 2044.
According to Oklo’s release, the announcement called this Master Power Agreement as “one of the largest corporate clean power agreements ever signed” and it establishes a framework for collaboration and individual binding agreements to be finalized as project milestones are reached. Oklo will develop, construct, and operate these powerhouses to provide power to Switch across the United States.
Oklo also shows that it has been selected for four U.S. Department of Energy projects (totaling over $15 million) to develop waste-to-energy fuel recycling.
One issue which will be hard to rectify for some investors is that Oklo is a SPAC-backed company that is now worth $2.6 billion in market capitalization after nearly tripling its share price since the September lows. Another issue is that Oklo has very few analysts who are actually following the stock. In September, B. Riley issued a new Buy rating with a $10 target at that time and Citigroup also had a $10 target at that time.
Oggonomics does not maintain any in-house ratings or price targets on Oklo and the related companies.
