By Avi Salzman

Nuclear energy has been one of the hottest areas of the stock market this year, with the VanEck Uranium and Nuclear exchange-traded fund up 40%. The latest earnings season's early results show that some of the enthusiasm about the industry is justified -- but there's a long way to go before the expected nuclear renaissance becomes a reality.

BWX Technologies, a Virginia-based nuclear technology company, blew away analysts' earnings expectations late on Monday, and its stock soared 17% Tuesday. The company, which makes parts for reactors, has contracts with the Navy to build equipment for things like nuclear submarines. It also supplies the commercial industry.

William Blair analyst Jed Dorsheimer wrote that "BWXT is the durable name in the nuclear energy sector" and encouraged investors to keep buying the stock despite its premium valuation.

But utilities -- the most important buyers and producers of nuclear power -- are sounding more cautious.

On second-quarter earnings calls, utilities have balked at investing in new nuclear generation, telling investors that any new reactors would take years to build and need financial assurances from the government or elsewhere.

Entergy CEO Andrew Marsh said on the company's earnings call last week that "we haven't cracked the nut" of how to finance and build new reactors. Entergy has existing reactors in Louisiana, Arkansas, and Mississippi with about 5 gigawatts of capacity, one of the largest fleets in the nation.

Marsh said he's concerned about the financial risks of adding nuclear reactors. "We are looking for ways to manage that risk. It could be in part from the customers, but the customers don't want to take on a whole lot of uncertainty, either," he said.

Other utility executives also said they're exploring building new nuclear reactors, and are hearing strong demand for the technology. But the timeline and financing are making larger projects difficult. Building a reactor can take more than a decade -- a long delay at a time when artificial-intelligence data centers are demanding power immediately.

"I think it's really mid-next decade before any of these types of things are going to be commercially available in this country," said William Fehrman, CEO of Ohio-based utility AEP.

Cameco, North America's largest uranium miner, also cautioned investors on its call that "greenfield [nuclear] is not going to happen on the time frames and budgets people are proposing."

Fehrman said AEP's customers seem particularly interested in small modular reactors, or SMRs, which are smaller versions of reactors that sometimes use different technology. SMRs haven't been built in the U.S., but offer the promise of shorter development timelines. Among the big players in the industry are publicly traded Oklo, GE Vernova, and Nuscale, and privately held Holtec, Terrapower, Kairos Power, and X-Energy. AEP is considering two sites for potential SMRs, in Virginia and Indiana.

At Southern Company, which was the last utility to actually complete new reactors, CEO Christopher Womack said he is confident the U.S. will build more. "We continue to believe that for this country to respond to the incredible demand we see, new nuclear has got to be a part of the solution set going forward," he said.

But the company is still working through the financing constraints. Southern Company's latest reactors came in well above budget, saddling consumers with extra costs.

Other important industry players have yet to report earnings, however. Nuclear investors will get more information over the next week as nuclear reactor owners Constellation Energy and Vistra report earnings, along with nuclear developers Oklo and Nuscale.

Write to Avi Salzman at avi.salzman@barrons.com

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August 05, 2025 14:34 ET (18:34 GMT)

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