Nuclear Cools on AI Jitters & Supertanker Demand Spikes

John Coteau (0:00)

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Hanna Horvath (0:32)

The best place to be in an oil crisis is on a very big boat.

Dylan Lewis (0:35)

Would you trust an AI agent with your shopping list?

Hanna Horvath (0:38)

For Thursday, September 17th, it's Brew Markets Daily. I'm Hanna Horvath.

Dylan Lewis (0:42)

I'm Dylan Lewis. Let's get moving and grooving.

Hanna, we are going to go nuclear to kick off today's show. Nuclear energy has been one of the busiest places in the market over the last few years, as people are looking for ways to power our AI future. And it looked like there was going to be a new name on the market for investors to access that trend, that name Holtec. The company specializes in nuclear power generation and energy storage, and they were planning to come public this fall. The company is also the first to try to bring a decommissioned nuclear reactor back online with their Palisades plant in Michigan. But this week, the company announced it was delaying its upcoming IPO due to current market conditions. The company's CEO, Krishna Singh, called it a perfect storm, referring to investor concerns over capital expenditures associated with the AI buildout, public opinion of data centers, and the development of AI broadly.

It seems to me, Hanna, that it's pretty unusual for us to get to this point in the IPO process, where there's a sense of pricing, there's a sense of prospectus out there for the public to look at, only for a company to say, you know what, no, we're going to delay this.

Hanna Horvath (1:51)

Yeah, you know, it can happen, but getting this far in the process, as you just said, is quite notable because at this point, as you said, we've filed a prospectus, they've started talking to investors, and they have a pretty good sense of what the market is willing to pay.

My guess is that in those conversations, it told Holtec something that it didn't necessarily want to hear. The company had been looking to raise as much as 900 million at a roughly 10 billion valuation, and Holtec did 500 million in revenue in 2025, so very roughly, investors were being asked to value this thing at nearly 20 times annual sales. That is a pretty rich valuation for a company where a big piece of their growth story depends on projects that are incredibly expensive, highly regulated, and can take years to come online. To be fair, there was a decent amount of hype around Holtec. Time had named it one of the 10 most influential energy companies of the year, in part because it's trying to do something that has never been done before in the US, which is to restart a nuclear plant that had already been decommissioned. But the market risks here are real. Rates are higher, capital is more expensive, and investors are starting to scrutinize just how much money can go into the AI buildout before anybody gets paid.

Dylan Lewis (2:58)

Yeah, and really this category in general has had a very tough year, despite there being a lot of high hopes around it. We look at over the past 12 months, companies that are in the modular reactor space, they've had a very, very tough run. Oklo down 60 percent over the last 12 months, NuScale down 75 percent over the last 12 months. There are probably some questions that have been popping up in AI that are hurting Holtec. There's been a very large narrative shift in that space recently.

But also, the nuclear space in general has cooled off because I think a lot of investors have transitioned from the hype of this is clean nuclear energy, we're excited about this, to the cost realities of actually building out these kinds of businesses.

Hanna Horvath (3:36)

Yeah, another thing I think is kind of interesting here is that earlier this week we were talking about how Bank of America had a warning that investment banking activity is slowing down. And Holtec was supposed to be the first of a few larger IPOs at the end of the year. There are still a couple of huge names in the pipeline right now. Anthropic has been moving towards a NASDAQ listing. Chipmaker Altera has filed for an IPO this week. And SB Energy, which is the SoftBank-backed company that's building data centers and powering infrastructure, is also preparing for a US IPO. With reports putting a potential valuation around $50 billion, I should point out all of those names that I just said are also tied to AI. So if the market dampens a bit on AI and data center exposure, could we be having a similar conversation as those deals get closer?