The immense electricity requirements of artificial intelligence are fueling a dramatic surge in the stock valuations of power companies, with a particular focus on the nuclear energy sector. This investor optimism has pushed some company valuations to levels disconnected from their current revenue or profitability, raising questions among market analysts about a potential speculative bubble.
An analysis of 75 companies benefiting from the AI boom shows that while sectors like semiconductors and cloud computing have seen significant growth, power providers have experienced the most extreme valuation expansion over the past two years.
Key Takeaways
- The valuation of power company stocks linked to AI has nearly tripled in the last two years, outpacing other tech sectors.
- Nuclear energy is attracting significant investment due to its carbon-free, high-output nature, which is ideal for powering data centers.
- Several nuclear startups with little to no revenue are currently holding multi-billion dollar market capitalizations.
- Recent, sharp stock price fluctuations in the sector suggest high sensitivity to market sentiment and potential volatility.
The AI Energy Crunch
The global race to develop and deploy artificial intelligence has created an unprecedented demand for computational power. This, in turn, has led to a massive need for the electricity required to run the vast data centers that train and operate AI models.
Major technology firms are actively seeking reliable, large-scale energy sources to power their expanding infrastructure. This has put a spotlight on the energy sector, transforming traditionally stable utility stocks into high-growth prospects tied directly to the AI revolution.
While various energy sources are being explored, nuclear power has emerged as a particularly attractive option for its ability to generate massive amounts of consistent, carbon-free electricity. This has prompted tech giants like Microsoft, Amazon, and Google to sign multi-billion dollar agreements with established nuclear plant operators.
Valuations Reach New Heights
The rush to secure power for AI has caused investor valuations for energy stocks to climb sharply. A comparison of market metrics reveals the extent of this trend. The median price-to-sales (P/S) ratio for a basket of AI-related power companies has jumped to 4.53 in 2025, a nearly threefold increase from its 1.52 level in 2023.
This expansion is significantly larger than in other AI-adjacent sectors. For instance, the P/S ratio for networking and cooling equipment makers rose from 2.09 to 4.45 over the same period, while cloud providers saw their ratio increase from 6.34 to 10.5.
Unprofitable Yet Highly Valued
The power sector stands out for another reason: it contains more unprofitable companies than any other AI-beneficiary category. Within the group of 14 power companies analyzed, five are projected to report a financial loss this year. No other category analyzed had more than one unprofitable company.
This data suggests that investors are pricing these stocks based on future potential and their strategic importance to the AI buildout, rather than on their current financial performance.
The Nuclear Upstarts
While established operators like Constellation Energy and Vistra have seen their stocks soar, the most extreme examples of this valuation surge are found among nuclear technology startups. These companies are often years away from generating significant revenue or achieving profitability.
Case Study: Oklo and NuScale
Oklo (OKLO), a nuclear tech startup, is a prime example. At its peak earlier this month, the company's market capitalization reached $25.7 billion, marking a 720% increase since the beginning of the year. Remarkably, Oklo is the only company among the 75 analyzed that is expected to report zero revenue in the current year. Analysts do not project profitability for the company until 2030.
"The market is placing enormous bets on the future of these technologies. The valuations reflect a belief that a few of these companies will become essential infrastructure for the AI economy." - Market Analyst Observation
Similarly, NuScale Power (SMR), a developer of small modular reactors, saw its stock value double between January and mid-October. At its peak, the company, which reported $37 million in revenue last year, was valued at over $15 billion. Projections indicate it is not expected to be profitable until at least 2029.
A Volatile Market
The high valuations tied to future promise have also introduced significant volatility. A recent trading week highlighted how quickly sentiment can shift for these AI-linked power stocks.
Established companies like Constellation Energy and Vistra, along with GE Vernova, saw their values drop by more than 10% in the first half of the week before recovering to finish largely unchanged. The impact on the startups was even more severe.
- NuScale Power (SMR)
- Oklo (OKLO)
- Fermi (FRMI)
These three companies all lost more than 25% of their value from Monday's open to midday Wednesday. While they also rebounded, they finished the week with substantial losses in the low- to mid-teens. This price action underscores how heavily these stocks are influenced by investor sentiment rather than fundamental financial metrics, a classic indicator of a speculative market.