Bank of America Downgrades Oklo and NuScale, Citing Unrealistic Valuations

Bank of America downgraded Oklo and NuScale Power, citing unrealistic valuations. Oklo fell 3.8% and NuScale Power fell 3.9% in Tuesday's trading. The bank believes the companies' valuations now embed unrealistic deployment ramps and discount rates.

Bank of America (BofA) has downgraded both Oklo Inc. (OKLO) and NuScale Power Corp. (SMR) due to concerns over unrealistic valuations. The analyst firm believes that the current valuations of these nuclear energy companies reflect overly optimistic deployment projections and discount rates. The downgrades came on Tuesday, September 12, 2025, leading to significant stock price drops.

Oklo's stock fell by 3.8%, while NuScale Power's stock dropped by 3.9% in Tuesday's trading session. The downgrades were accompanied by revised price objectives for the stocks. BofA lowered its price target for Oklo to $117, up from $92, and for NuScale Power to $34, down from $38. However, these new targets left little room for upside as the stocks were already trading near their new price objectives.

BofA analyst Dimple Gosai expressed optimism about the long-term potential of nuclear energy but cautioned that current valuations do not align with the sector's typical deployment and discount rates. She noted that the stocks' implied discount rates of 10.9% for Oklo and 6.2% for NuScale Power are "well below" what she sees for the sector as a whole. This discrepancy suggests that the stock prices are baking in an overly bullish deployment trajectory.

Gosai also highlighted several risks associated with the stocks, including elevated retail participation, low active ownership, and high passive ownership. Additionally, she pointed out that Oklo's "build-own-operate" model, while more capital-intensive, offers better visibility on funding compared to NuScale's approach, which involves an investing and operating partner.

The downgrades come amid a broader debate on Wall Street regarding the nuclear energy sector and its potential to power artificial intelligence (AI) ambitions. While the sector has seen significant growth, the unrealistic valuations and deployment expectations highlighted by BofA serve as a cautionary note for investors.