Wall Street does not seem to care that Oklo has no revenue and lost nearly $30M in Q3

Call it the data center effect.

One of the biggest topics swirling across both finance and tech is whether the AI boom is nearing a bubble, with a significant focus being placed on the staggering amounts of money being poured into the building of data centers.

But whether or not the investment in AI data centers represents a bubble, the more data centers that get built, the more the demand for energy increases.

This means that the eventual need to power these data centers appears to be enough to keep Wall Street bullish on the companies that will do just that.

Such is the case with nuclear energy startup Oklo Inc. (OKLO), one of the hottest names in small-modular reactor (SMR) space.

The company released its third-quarter earnings on Tuesday, reporting no revenue. This is not surprising, given the fact that Oklo is not expecting to launch its first SMR until sometime near the end of the decade.

But Oklo also reported a loss of 20 cents a share, far higher than the 13 cents that analysts had expected. It was also a significant spike from the 8 cents it reported for the quarter a year earlier.

The company also reported a net loss of $29.7 million for Q3, which was much steeper than the $18.2 million loss that analysts had been expecting.

And while Oklo’s stock dipped in after-hours trading, it gained nearly 7% on Wednesday. It has now soared 423.7% for the year to $111.17.

Oklo seen as a leader in the AI revolution

Wedbush analysts, led by Dan Ives, were undeterred by the growing losses. They reiterated their Outperform rating on Wednesday and maintained a $150 price target, seeing the company “as a core AI energy enabler with decade long tailwinds.”

At the center of these tailwinds are the proliferation of data centers.

“We continue to believe Oklo is setting the stage for nuclear energy to become widely adopted over the next decade as the AI Revolution data center buildout is driving significant demand for new energy to power these initiatives with necessary computing power expected to grow 10x,” Ives wrote.

Cantor Fitzgerald analysts, led by Derek Soderberg, are equally bullish on Oklo’s future growth, maintaining its Overweight rating on Wednesday and raising its price target to $122 from $84, a 45.2% increase.

“Oklo is paving the way for the world to safely transition to a nuclear-powered future,” Soderberg wrote. “Its small module reactor technology is based on proven fast fission reactor technology that allows the company to deploy the most efficient, cost-effective energy to the emerging AI economy.”

Soderberg also pointed to the favorable regulatory environment for nuclear energy, adding that “Oklo will be a big winner during the coming multi-trillion-dollar energy transition.”

However, while many on Wall Street are sold on Oklo’s future, there is concern about its present performance, which will likely only increase because of its mounting losses.

Goldman Sachs analyst Brian Lee initiated coverage on the stock in September, expressing some trepidation about the fact that it will take several more years before Oklo starts generating revenue.

“Over the past year, OKLO has been a catalyst-driven stock, and while we see a path for continued near-term catalysts, we believe the company needs to secure finalized customer agreements," Lee wrote.