NuScale: The real risk is not rate hikes, but commercialization.

$NuScale Power(SMR.US)

Yesterday, the Federal Reserve kept interest rates unchanged. While Walsh hinted at rate hike expectations, it currently seems that rate hikes alone are not enough to crush NuScale. What truly determines its fate is whether commercialization can succeed.

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It's easy to misunderstand NuScale as a traditional nuclear power company, but that's not the case.

It is more like a tech company still in its startup phase.

Currently, its largest source of revenue is not selling reactors, but rather design, technology licensing, and government project support. In other words, the company's true large-scale cash flow has not yet begun.

Therefore, a 25-basis-point rate hike affects it most not through interest expenses, but by worsening the financing environment and making project investments more cautious.

The real question is: Will there be customers willing to pay in the future?

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Recently, a rumor has been circulating in the market:

The Romania flagship SMR project is delayed until 2034, and the business model is broken.

This statement is only half true.

The reality is that the Romania project has indeed encountered difficulties.

The Final Investment Decision (FID) has not yet been completed, and financing is still underway, so the project timeline keeps getting pushed back. Some analysts even predict that the entire project may not be fully operational until around 2034.

However, "broken business model" is an opinion, not a fact.

A project delay will affect market confidence, subsequent orders, and financing capabilities, but it does not mean that the entire SMR route has failed.

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What truly deserves attention is not the delay, but orders.

As of now, NuScale still lacks truly large-scale commercial orders.

There are currently three main narratives in the market:

First, the Romania project.

This is the project closest to commercialization, but since the FID is not yet complete, it cannot be considered as having locked in revenue.

Second, the US TVA project.

It is large in scale and highly anticipated by the market, but currently remains in the cooperative development stage, not a formal procurement contract.

Third, AI data centers.

This has been a key driver of NuScale's valuation increase over the past year.

The company stated that it is in contact with several large AI data center operators, but as of now, no formal contracts have been announced.

In other words,

NuScale has projects, customers, and partnerships, but it still lacks truly executed orders.

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Therefore, I believe what the market should truly focus on in the future is not whether the Fed will raise rates next time.

Instead, it should watch three signals:

First, when will the Romania project complete its FID.

This is the first piece of the puzzle to verify whether the entire business model works.

Second, when will it secure its first truly meaningful commercial reactor construction contract.

Only when customers are willing to put their money where their mouth is will the business model be truly established.

Third, when will AI data centers sign formal cooperation agreements.

If large data centers truly adopt SMR for power supply in the future, this will be not just an opportunity for NuScale, but also a significant milestone for the entire small modular nuclear industry.

A company's value is ultimately determined by its customers.

Without customers, even the most advanced technology is merely a lab result.

With customers, even difficult financing environments can find funding.

For NuScale, the most important thing in the future is not the next rate hike, but when it can turn technology into orders, orders into cash flow, and stories into business.

The essence of investing is not predicting stock prices, but judging whether a company's commercialization is being realized step by step.