Shares of Oklo (OKLO -7.73%) fell on Tuesday, finishing the day down 7.6%. The drop comes as the S&P 500 and Nasdaq Composite lost 0.2% and 0.9%, respectively.

Oklo took a hit today after The Wall Street Journal reported that Alphabet's Google has signed a deal with a nuclear fusion company.

A new kind of nuclear energy

Google has signed a multibillion-dollar deal with Commonwealth Fusion System (CFS), a nuclear fusion start-up backed by Bill Gates. The deal will see Google secure 200 megawatts from CFS's first plant in Virginia by the 2030s.

Michael Terrell, head of advanced energy at Google, said of the deal, "By entering into this agreement with CFS, we hope to help prove out and scale a promising pathway toward commercial fusion power."

Image source: Getty Images.

Nuclear fusion, in contrast to today's fission-based systems, produces significantly more power and is totally safe and clean -- no spent nuclear material to dispose of and no risk of a meltdown. It has long been the holy grail of energy production but has so far eluded scientists. However, recent developments indicate it could be a reality in the next decade or so.

Oklo could get leapfrogged

Oklo is developing small model reactors (SMRs) that are more advanced in many ways than legacy nuclear power plants. However, they are still fission reactors. Oklo's timeline for commercial delivery of its power plants is much shorter than any possible fusion reactor coming online, but today's deal raises the question: If fusion is possible within a decade, is investing in a reactor from Oklo worth it?

Here's the thing: Scientists have thought fusion technology was a decade or so away for many years. This is still very experimental technology. I don't think any company is going to hold off on investing in the energy it needs today because fusion is slightly closer to a reality. For investors with a higher risk tolerance, I think Oklo is a solid pick, but know that the stock is pricey at the moment, and there is a long road ahead.