Last week's election of Donald Trump has shaken up markets.
Stocks have broadly soared, though there have been pockets of weakness, such as real estate and multinational companies that could be impacted by Trump's proposed tariffs.
Treasury yields jumped on the election as well, signaling that bond investors were wary of increased deficits and the impact of tariffs under a new Trump administration, though bond yields have fallen in subsequent sessions.
One of the biggest questions about the new administration is how its energy policy, which is likely to be substantially different from the Biden administration's, will impact the economy and the stock market. Specifically, investors have been wondering what the Trump administration's approach to nuclear energy will be as the nuclear sector is suddenly a hot topic after big tech companies like Alphabet, Microsoft, and Amazon have all embraced nuclear in recent weeks as a way to power demanding AI data centers that are expected to proliferate as AI technologies gain adoption. That's led to a surge in nuclear stocks like Nuscale Power (SMR -5.95%) and Oklo (OKLO 3.73%), which is backed by OpenAI CEO Sam Altman.
It's not clear exactly how nuclear stocks will be affected by the Trump administration, but let's take a look at some statements from the president-elect to gain some insight into the subject.
Image source: Getty Images.
Trump weighs in on nuclear energy
In his first term, Trump supported pro-nuclear policies, enacting an "all-of-the-above" energy policy, and his administration provided billions of loans for the construction of Plant Vogtle in Georgia and the failed Carbon Free Power Project in Idaho that included Nuscale Power's small modular reactor technology.
In August, Trump said at a rally that he would bring new reactors online once his term started, and he has talked up getting "rapid approvals" of new energy infrastructure. He also said in one of his speeches that he wanted to bring "advanced small modular nuclear reactors" online and sees them as advantageous over larger nuclear plants, citing "cost overruns."
He also made similar comments on Joe Rogan's podcast about large plants like Vogtle, saying they "get too big, and too complex and too expensive."
Near the end of his last term, Trump signed an executive order promoting small modular reactors for national defense and space exploration.
He's also expressed skepticism toward the Biden Administration's Inflation Reduction Act, which included tax credits for nuclear projects, but there is substantial Republican support for it since much of the funding went to Republican districts.
On NuScale's recent earnings call, CEO John Hopkins expressed optimism for the Trump administration, saying, "I think with President Trump, we'll see them trying to curtail and have less regulations. I do happen to know that having had a conversation with him previously in his last year, he was very pro-nuclear."
What it means for nuclear stocks
Trump's influence over the nuclear sector could be more limited than investors hope, at least for SMR technology companies like Nuscale and Oklo.
First, the technology is still under development, and even optimists don't expect it to be deployed until the end of the decade at the earliest.
Additionally, the Biden administration has been supportive of nuclear energy, seeing it as a critical component of the fight against climate change. Just last month, the administration opened up applications for up to $900 million to support small modular reactor technology.
In other words, the upside potential from even a strongly pro-nuclear Trump administration could be limited as accommodative policies are already in place, and the development of the technology seems to be the biggest challenge, rather than regulation.
However, investors in Nuscale and Oklo, or those considering those and other nuclear stocks, should keep an eye on upcoming appointments related to the Department of Energy, including the Nuclear Regulatory Commission, which oversees the development of small modular reactors and where Trump will have the opportunity to name most of the Commissioners who run the NRC during his term.
Over the long run, the landscape looks promising for nuclear stocks given the support of big tech companies and the incoming president, though investors will have to be patient as it will likely be years before SMRs are deployed or nuclear policy makes an impact on larger nuclear plants and the rest of the industry.
