X-energy stock rose 27% on the first day of trading following its massive IPO

X-energy stock popped today in its Nasdaq debut, opening at $30.11 before closing at $29.20, up 27% from its initial public offering of $23 per share.

It seems investors can’t get enough of nuclear energy. Even the stock’s initial price was revised upward from the $16 to $19 target the company put forth during its investor roadshow. In conclusion, the company’s value reached $11.5 billion.

Just five years ago, such interest in a nuclear startup would have come as a surprise to many.

At the time, the nuclear industry was plagued by project delays and massive cost overruns for newly completed reactors. Two power plants were completed in Georgia – one in late 2010 and the other in early 2020. In total, their construction cost was about $30 billion.

Nuclear startups in the early 2020s were in their infancy, and at least one company faced major regulatory issues, raising concerns that the industry was unable to leave its past behind.

Now, investors are optimistic that X-energy and its peers have found a way to overcome the challenges.

Much of the momentum can be attributed to the AI-driven data center boom. GPUs require huge amounts of electricity, and while solar, wind, batteries and natural gas fill the need today, technology companies were hoping to diversify. Nuclear power is one of several options they have explored, hoping the compact form factor will be a good fit for their sprawling data centers.

Nuclear power has long had greater potential to power the U.S. grid than it has been able to supply. Today, about 18% of the country’s electricity comes from nuclear power. But reactor costs have risen in recent decades. Nuclear power may be one of the most reliable sources of electricity in the United States, but it is also one of the most expensive.

The 80-megawatt X-energy reactor design is smaller than many existing nuclear power plants. The company is betting that modularity can help cut costs, and data center operators hope a single campus will be powered by a fleet of reactors, providing the kind of redundancy and stability they value. Amazon said it will buy up to 5 gigawatts of power from X-energy over the next decade or so, but chemical maker Dow will get the startup’s first power plant.

Construction is underway on X-energy’s fuel facility, and while the company has not yet begun construction of a power plant, investors are optimistic that the company will be able to free nuclear power from the malaise it has been in for decades.