Colin’s Note: Artificial intelligence is going nuclear…
We first put the trend on your radar back in October when Microsoft was looking into an alternative fuel option for AI and landed on nuclear energy.
OpenAI’s Sam Altman has been making headlines as the next forerunner in the nuclear-powered AI race. He’s bringing his small modular reactor energy company public in just a few short months.
It could be an amazing profit opportunity… but I want you to have all the information before you “buy the hype.”
So we’ll get into what makes these small modular reactors a great potential energy source for energy-hungry AIs… Sam Altman’s edge in the nuclear-powered AI angle… And what it all means for you and your money.
It’s all in today’s Bleeding Edge. Click below to watch… or read on for the transcript.
AI is going nuclear.
That’s what we wrote to you back in October when Microsoft was actively hiring nuclear engineers late last year.
At the time, Microsoft was seeking an alternative to the grid to fuel its power-hungry AI applications like OpenAI’s ChatGPT and Microsoft’s Copilot.
And since then, the demand for AI has continued to explode. And this time, OpenAI’s Sam Altman is bringing his small modular reactor energy company public in just a few short months.
We alerted you some time back to the possibility of small modular reactors (SMRs) being a possible solution to the power crisis facing AI companies.
And now, a major order has come in from a data center, meaning SMRs could gain in popularity in the years to come. So a small modular reactor is a type of reactor that is smaller in size and has a reduced power output compared to the traditional large-scale nuclear reactors we’re all familiar with.
These smaller reactors typically generate electrical power ranging from tens to maybe a few hundred megawatts, making them ideal to help power data centers. SMRs are also designed to be modular, meaning multiple units can be installed at a single site to incrementally increase power capacity as needed over time.
This modularity also aids in scalability and flexibility in deployment.
SMRs are also engineered with advanced safety measures, which is important.
They have passive cooling systems that rely on natural circulation to prevent overheating, reducing the risk of really tragic accidents and the need to locate them near a natural water source.
The smaller size and the modularity of the SMRs generally require a lower initial capital investment compared to the larger reactors as well. This makes them far more accessible for smaller utility companies or countries just starting out with a nuclear program.
The smaller size of the SMRs also allows for components to be manufactured in a factory and then transported to the site, potentially reducing construction, cost, and time.
Their smaller size and the enhanced safety features we talked about allow SMRs to be located closer to urban areas where people live or in remote locations where large reactors just simply aren’t feasible.
And this past week, we’re seeing major news in the world of SMRs.
Just days ago, the world’s leading data center provider, Equinix, signed a $25 million agreement with Oklo.
The company specializes in advanced fission technology and nuclear fuel recycling. And the $25 million provides Equinix the choice of either acquiring stock at Oklo or obtaining a supply of power at a reduced rate.
Oklo’s small, fast fission reactors are capable of producing up to 15 megawatts of power and can operate for 10 years or longer before refueling is required.
Oklo stands out in the field of advanced nuclear technologies by focusing on a design with a strong historical foundation in safety and efficiency… while also addressing the critical issue of nuclear waste.
One of the first power plants to generate useful electric power from nuclear fission was the experimental Breeder Reactor I, which went online in 1951. It was cooled using the same methods Oklo is using today.
Oklo’s approach to the SMRs rooted in technology with a strong historical foundation and inherent safety features positions them uniquely in an advanced nuclear technology land state. Oklo not only stands out for this technology… but it’s backed by none other than OpenAI’s Sam Altman.
Last July, Altman’s blank check corporation – called AltC – agreed to merge with Oklo. The reverse merger of sorts – or SPAC – is expected to close sometime in July.
So, you have Sam Altman as a backer and Equinix as an early buyer. What’s not to like here?
Well, unfortunately, these SPAC deals have an absolutely terrible track record. In fact, investing in SPACs has been an absolute disaster for investors.
According to the website SPACInsider, every sector except one has a negative return after a SPAC deal closes.
These things cater to the insider investor… not the public investors like you and me.
With industries like cannabis, EV, crypto, and healthcare down nearly 90% or more after the SPAC goes public, I recommend taking a wait-and-see approach on not only Sam Altman’s AltC… but this small modular reactor technology as well.
Remember, in the stock market, it’s far more important to be right rather than early. And many investors are lured in by sexy stories and a world-class founder like Sam Altman.
But the reality is – and there are tons of examples like this – you could have bought Apple years after the iPhone was released and still be sitting on life-changing gains.
But despite the scary performance of SPACs, the news that the small nuclear reactors, it’s great for the AI industry which will need far more than just renewable energy sources like solar and wind to keep it moving forward.
The game plan I have is to wait for the hype of this new energy source to wear off… but continue to play the upside with AI gaining popularity. If anything, SMRs will allow AI data centers to grow without constraints. And that’s a good thing for the industry and investors as well.
That was The Bleeding Edge for today. I’m sure you’re going to be hearing a lot about SMRs going forward. Just keep in mind, sometimes the hype and new technology don’t often lead to a great investment. Hopefully, you guys have a great week. We’ll be back again soon. Bye for now.