This Newly Public Nuclear IPO Is Already Using AI to Speed Up Reactor Design. Is It a Buy?

X-Energy, a newly public nuclear energy company trading on NASDAQ under the ticker symbol XE, is quickly becoming intertwined with artificial intelligence (AI) within the nuclear sector. Established in April 2023, X-Energy has already secured a spot at the forefront of Project Prometheus, an initiative spearheaded by Idaho National Laboratory, Nvidia (NASDAQ: NVDA), and Amazon (NASDAQ: AMZN).

This $60 million project, backed by $10 million from X-Energy and its proprietary data, aims to integrate cutting-edge AI technology into various aspects of nuclear power generation, including reactor design, regulatory documentation, manufacturing, construction, fuel fabrication, and semi-autonomous operations.

X-Energy's flagship reactor, the Xe-100, an 80-megawatt small modular reactor, already has several significant clients, including Dow Inc., Amazon-backed Energy Northwest, and British energy giant Centrica. The company's project pipeline consists of 144 reactors, representing approximately 11.5 gigawatts of potential capacity. However, the primary challenge now lies in successfully constructing these reactors, as nuclear projects often encounter lengthy development timelines, expensive engineering work, and construction delays.

AI technology is poised to play a crucial role in overcoming these hurdles. By utilizing AI across engineering, licensing, and operations, X-Energy aims to expedite design iterations, generate regulatory documentation, and optimize fuel fabrication. This integration could significantly enhance the economic viability of X-Energy's reactor pipeline.

In addition to reactor development, X-Energy is constructing the TX-1 fuel fabrication facility in Oak Ridge, Tennessee, set to become the first commercial U.S. facility dedicated to producing TRISO fuel for advanced reactors. Once operational, TX-1 could supply fuel for up to 11 Xe-100 reactors.

Although X-Energy is currently not profitable, with Q2 revenue and grant income totaling $54.6 million, the company boasts substantial liquidity and no debt, standing at $1.9 billion. This financial strength provides X-Energy with ample resources to pursue its ambitious objectives. The combination of AI-driven data centers driving demand and the potential deployment of reactors to meet this demand makes X-Energy a unique investment opportunity in the nuclear sector.

However, the company faces significant risks as it transitions from an 11.5-gigawatt pipeline to operating 11.5 gigawatts of commercial reactors. These risks include licensing, construction, financing, supply chain execution, and customer commitments. Therefore, while X-Energy presents an intriguing high-risk nuclear growth stock, it may not be considered a conventional energy investment.