3 Nuclear Energy Stocks Set to Explode From Coming Rate Cuts

Federal Reserve shifts spark nuclear sector surge—these three players stand ready to capitalize.

Powering Up Portfolio Returns

While traditional finance still debates rate cut timing, smart money already positions itself in infrastructure-backed assets. Nuclear energy stocks—often overlooked in green energy narratives—offer rare exposure to both policy tailwinds and institutional demand for tangible value.

The Radioactive Trio

Three sector leaders emerge with robust balance sheets and expansion pipelines perfectly timed for cheaper capital. Unlike speculative tech plays, these companies actually generate electricity—and profits—around the clock. Their reactor fleets represent billion-dollar assets that become significantly more valuable when financing costs drop.

Nuclear's Second Act

Forget the outdated stigma. Modern nuclear combines baseline reliability with zero-carbon credentials that even ESG funds can love. Rate cuts could accelerate project approvals and capacity expansions, creating a virtuous cycle of investment and returns. The sector's inherent moats—regulatory barriers and massive capital requirements—mean established players face limited competition.

Atomic Allocation Strategy

Position before the crowd recognizes this asymmetric opportunity. While crypto bros chase memecoins, these nuclear stocks offer something radical: actual cash flows and government-backed revenue streams. Sometimes the smartest trade is investing in things that actually exist.

Image source: Getty Images.

Why might the Federal Reserve cut interest rates?

Economists seem pretty certain a rate cut of some size is in the offing. According to the latest inflation update here at The Motley Fool, inflation is still running hotter (2.9%) than the Fed's target rate of 2% -- which you might think WOULD give the Fed some pause. That said, the jobs market is showing sufficient signs of weakness that the Fed is getting concerned -- and inclined to roll the dice and risk a bit of extra inflation in hopes of goosing the jobs numbers higher.

In July, the U.S. Bureau of Labor Statistics (BLS) reported that only 73,000 net new jobs were created, which was below projections. Then came August's number, which was an objectively horrible 22,000 net new jobs -- less than one-third of what economists had predicted. And all of this came after May and June jobs numbers were revised downward by more than a quarter-million.

So the jobs market doesn't look great, and that means the Fed probably will cut rates today. Now what does this mean for you, the individual investor?

What it means for investors

Believe it or not, bad news for the jobs market and worrisome trends in inflation are both generally interpreted as good news for the stock market -- at least when a Fed interest-rate cut is on the table as a possible solution. This is because when the Fed lowers interest rates, it becomes cheaper to borrow, and cheaper to pay interest on debts, which can be a boon for companies not yet earning profits.

Which kinds of companies? Well, maybe I'm biased because I write a lot about nuclear stocks. But if you ask about companies that might benefit from debt getting a bit cheaper, the first to come to my mind are the handful working to develop a new generation of small modular (and micro) nuclear reactors (SMRs). In order from smallest to largest, these include(NNE -2.73%),(SMR -4.59%), and(OKLO -2.80%).

Investors value these three companies very differently. Nano Nuclear is worth only $1.5 billion in market capitalization, versus NuScale with an implied market cap of $11.1 billion, and Oklo tipping the scales at a weighty $14.1 billion.

But in many respects, these three companies look similar. Neither Nano Nuclear nor Oklo has any revenue to speak of. NuScale, which does have some revenue (from technology licenses, not from actual sales of either reactors or nuclear energy), still did only $56 million in business over the last 12 months -- enough to value the stock at nearly 200 times sales.

Lacking revenue, it stands to reason that all three of these nuclear energy stocks are also unprofitable. What worries me more than the losses based on generally accepted accounting principles (GAAP), though, is the fact that these companies must continue burning through their cash reserves as they work toward commercializing their technology. Any nuclear stock that runs out of cash before it starts generating positive free cash FLOW on its own is at risk of needing to sell shares, or take on debt, to raise the cash it needs.

It's here that lower interest rates from the Fed could lend a helping hand.

Who benefits most from a Fed rate cut?

I expect NuScale Power to benefit more than the others from a rate cut today. With only $420 million in the bank and an annual cash burn rate of $95 million, NuScale's on course to be the SMR stock that runs out of cash first -- potentially before it reaches profitability in 2030 (according to analysts polled by S&P Global Market Intelligence).

In contrast, both Oklo (with $534 million in cash and a burn rate of $53 million per year) and Nano Nuclear (with $210 million and $23 million, respectively) already have enough cash laid up to keep themselves in business for roughly a decade.

Relatively speaking, they're both in stronger financial positions than NuScale is -- but for this very reason, I expect NuScale stock to benefit most from today's Fed rate decision.