Key Takeaways
- Optimism about artificial intelligence has lifted the prices of stocks across various industries, but nuclear power providers have seen their valuations become the most untethered from the bottom line.
- Investors, aware of how much electricity is required to train and run AI models, are willing to pay three times more for AI-exposed power stocks than they were just two years ago.
- The stocks of nuclear tech companies with little to no revenue, like Oklo and NuScale Power, have pulled back over the last week, but the companies still sport multibillion-dollar market values.
AI boom or AI bubble? That’s been one of the most pressing debates on Wall Street of late.
Some investors see echoes of the Dotcom Bubble in Nvidia’s (NVDA) and OpenAI’s recent circular dealmaking bonanza and soaring stock prices. Others note the AI boom is being financed by hugely profitable tech companies, whose valuations aren’t nearly as high as their Dotcom peers.
As Big Tech’s AI spending has ballooned, so have the ranks of companies claiming a piece of the pie. The AI buildout has turbocharged the sales of unsexy, slow-and-steady businesses and transformed their stocks into buzzy growth names. It has also juiced the stocks of nascent companies that are years from self-sufficiency, creating pockets of exceptional froth within a pricey AI ecosystem.
Why This Is Important
The stocks that gain the most during sharp market rallies are often the stocks that, when sentiment turns negative, have the farthest to fall. That is especially true of young companies that, without substantial sales, rely on debt and equity markets to fund their growth.
To understand where the AI trade has become most bubbly, Investopedia identified 75 companies regularly referred to as “AI beneficiaries” by Wall Street analysts, and sorted each into one of five categories: cloud computing providers; semiconductor makers; software companies; power providers; and networking, storage, and cooling equipment makers.
A few companies, like Microsoft (MSFT), fit in multiple categories, in which case we’ve placed them in the one that feels most central to their AI business today. At present, Microsoft’s cloud revenue is the best metric for assessing its AI business, so it’s classified as a cloud provider instead of a software company.
Power Provider Stocks Seem The Frothiest
All five categories have seen their valuations rise over the past few years, but none more than power providers. The median price-to-sales (P/S) ratio of our power basket in 2025 is 4.53, nearly three times the median in 2023 (1.52). The next largest P/S expansions over that period were in networking, storage and cooling (4.45 in 2025 vs. 2.09 in 2023) and cloud providers (10.5 vs 6.34). (Cloud providers have a higher P/S ratio in absolute terms because the category is composed of tech stocks that have historically commanded higher valuations. This is why we’ve compared change over the past three years rather than absolute P/S ratios.)
Power also has more unprofitable companies than any other category—so many in fact that we’re using price-to-sales as our benchmark valuation metric rather than the more common price-to-earnings ratio. Five of the 14 companies in our power basket are expected to report a loss this calendar year. No other category has more than one unprofitable company.
The race to build the data centers that train and run AI models has set off an equally frenzied race to generate and transmit the vast amounts of electricity those data centers consume. Nuclear energy has attracted interest from tech companies for its efficiency and small carbon footprint. Microsoft, Amazon (AMZN), Alphabet (GOOG), and Meta (META) have all signed multi-billion dollar deals with nuclear power plant operators like Constellation Energy Corp. (CEG) and Vistra (VST), both of which have seen their stocks surge over the past two years.
But in their rush to bring reliable sources of electricity online, tech companies and investors have also thrown money at nuclear tech upstarts, some without operational generators or regulatory approvals. Shares of small modular reactor maker NuScale Power (SMR) doubled in value between January and mid-October. At the stock’s peak earlier this month, the company, which reported $37 million in revenue last year and isn’t expected to be profitable until 2029, was valued at more than $15 billion.
A Booming Stock Price With No Revenue?
Meanwhile, nuclear tech startup Oklo’s (OKLO) market capitalization peaked at $25.7 billion earlier this month, a 720% increase from the start of the year. Oklo is the only company of the 75 we’ve included in our analysis that is expected to report no revenue this year. Analysts forecast it will turn a profit for the first time in 2030.
Though it’s not just nuclear businesses that have achieved rich valuations. Fermi (FRMI), the developer of a massive AI data center campus in the Texas Panhandle, was founded in January and went public in early October at a valuation of more than $19 billion. Fermi plans to build 11 gigawatts of computing capacity powered by on-site nuclear, natural gas, wind, and solar generators. It expects to break ground on its first data center in March, and hopes to have about 1 GW of capacity online by the end of 2026.
AI power stocks just finished a volatile week that may underscore the extent to which their prices are driven by fickle sentiment. Constellation Energy and Vistra both shed more than 10% of their value in the first half of the week, as did GE Vernova (GEV), whose turbines are in high demand from data center clients seeking to draw on the South’s ample supply of natural gas. All three finished the week little changed.
The upstarts were hit even harder. NuScale, Oklo, and Fermi all lost more than 25% of their value between Monday’s open and midday Wednesday. But they too rebounded, finishing the week with losses in the low- to mid-teens.
