Oklo (NASDAQ: OKLO), the nuclear energy startup backed by OpenAI CEO Sam Altman, announced on December 18 that it had signed a non-binding Master Power Agreement to supply up to 12 gigawatts of energy to Switch, a Las Vegas-based data center operator.
The deal, one of the largest corporate clean power agreements to date, will provide reliable, clean energy for Switch’s AI, cloud, and enterprise data center infrastructure across the U.S.
The news initially sent Oklo’s stock surging 18%. The rally saw the stock hit an intraday high of $22.94 before pulling back to close 3.9% lower at $18.36.
Picks for you
December has been a tough month for Oklo investors, with shares down nearly 15%. Despite this dip, Oklo’s performance reflects broader optimism around nuclear energy’s role in supporting AI’s growing energy needs.
The deal driving the hype
The agreement outlines Oklo’s plans to develop, construct, and operate nuclear powerhouses across the U.S., delivering electricity to Switch through a series of power purchase agreements.
The partnership aims to supply 12 gigawatts of energy by 2044, with the first Aurora powerhouse reactor expected to become operational at the Idaho National Laboratory (INL) by 2027.
Describing the agreement as a “framework for collaboration,” CEO Jacob DeWitte emphasized that more specific binding agreements will likely follow as the project achieves critical development milestones.
“The lifespan of this Master Agreement will allow us to iterate and evolve with Switch, from development to deployment to scaling. We believe that working with Switch will not only accelerate our early powerhouses but also accelerate our ability to scale by demonstrating customer demand for decades to come.”
–Jacob DeWitte, Co-Founder and CEO of Oklo
The bigger picture
Oklo’s announcement comes at a time when big tech companies are increasingly investing in nuclear power to meet growing energy demands. Amazon (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), and Oracle (NYSE: ORCL) have all announced investments in small modular reactor (SMR) technology this year. Meta Platforms (NASDAQ: META) recently unveiled plans for a $10 billion AI-focused data center in Louisiana.
Amid this backdrop, Oklo’s stock has experienced a remarkable surge, climbing approximately 80% in 2024. This bullish momentum reflects increasing investor confidence in nuclear energy’s potential.
Notably, Oklo’s shares have surged more than 125% since September, when Constellation Energy (NASDAQ: CEG) announced a landmark two-decade nuclear power agreement with Microsoft.
However, despite this impressive performance, Oklo’s stock remains subject to volatility. December has been particularly challenging, with shares declining nearly 15% amid broader market uncertainty.
The road ahead
Oklo’s ambitious plans are not without challenges. The company has yet to deploy its first reactor and anticipates a full-year operating loss of $40 to $50 million. Regulatory hurdles and questions about the broader impact of nuclear deals on community energy prices remain key concerns.
Nonetheless, Oklo’s growing customer pipeline, which expanded from 700 megawatts in mid-2023 to 2,100 megawatts by Q3 2024, showcases its rapid progress. The company’s partnership with Switch marks another step forward, reinforcing its role as a leader in the advanced nuclear sector.
Featured image from Shutterstock.
