NuScale Power’s Rally Faces Underlying Challenges

Nuscale Power US67079K1007

The start of 2026 has brought a significant rebound for NuScale Power, the developer of small modular reactors (SMRs), following a volatile end to the previous year. This recovery, however, is built upon a foundation of persistent business challenges and strategic uncertainties that cast doubt on its sustainability.

Two major corporate developments are contributing to investor unease. In December, shareholders approved a measure to double the company's authorized share count from 332 million to 662 million. While this provides financial flexibility for potential future capital raises, it also carries the risk of diluting the value of existing shares. A more significant concern is the announced complete divestment by Fluor Corporation, NuScale Power's largest single shareholder. Fluor intends to fully exit its position by the end of the second quarter of 2026. The departure of such a prominent anchor investor inevitably raises questions about the firm's long-term prospects.

A Powerful but Flawed Rebound

Equity markets have shown renewed enthusiasm for the nuclear energy sector, a trend from which NuScale has benefited. Its shares surged more than 40% in the initial weeks of the new year. This impressive gain comes on the heels of a steep 61% decline experienced during the fourth quarter of 2025. The broader revival of interest in atomic power, partly driven by major tech companies seeking energy for AI data centers, provided a tailwind. A ratings change from Bank of America Securities on January 9 also played a role, as the firm upgraded NuScale from "Underperform" to "Neutral." Notably, this upgrade was accompanied by a reduction in the price target, which was lowered from $34 to $28, signaling continued caution.

Fundamental Weaknesses Persist

Beneath the surface of the rising share price, recent quarterly results reveal substantial operational difficulties. The company reported a significant earnings miss, with a loss per share of $1.85. This figure was far worse than analyst estimates, which had projected a loss of just $0.11 per share. Revenue also failed to meet expectations. These poor results are underscored by a deeply negative net margin approaching 600%, undermining confidence in the current business model's path to profitability.

Despite these headwinds, the company retains certain competitive strengths. NuScale Power holds a leading regulatory approval in the United States for its SMR designs. In a recent positive development, utility giant Duke Energy initiated a site permitting process and named NuScale's technology as its preferred option. The upcoming quarterly report on March 10 will be a critical test, indicating whether the company can translate favorable sector sentiment into tangible operational progress.