Nuclear energy stocks attracted significant investor interest last year amid growing demand for reliable, low-carbon power driven by the expansion of artificial intelligence infrastructure. However, the initial enthusiasm has cooled, with many nuclear-related equities experiencing sharp declines from their peak valuations.

The trend was highlighted recently when Holtec International, a nuclear services provider, postponed its planned initial public offering (IPO) that had been scheduled to price on Thursday. This decision marks a setback for the sector, which had seen substantial investor enthusiasm fueled by the prospect of new nuclear technologies and long-term power contracts.

The surge in interest was largely tied to hyperscale technology companies such as Microsoft and Amazon, which have sought to secure baseload electricity through “behind the meter” agreements with nuclear operators. These arrangements allow companies to bypass traditional electric grids and purchase power directly from nuclear plants, helping address the need for consistent, carbon-free energy that solar and wind sources cannot reliably supply.

Despite the optimism surrounding nuclear energy’s potential, constructing new large-scale reactors remains a lengthy and complex endeavor, often requiring several years before becoming operational. This has shifted focus toward smaller, modular reactors (SMRs), which can be produced on a mass scale with the hope of faster deployment. Those advancements, combined with government incentives, drove investor interest in firms like NuScale Power and Centrus Energy, which provide reactor designs and nuclear fuel respectively.

One of the most notable stories was Oklo, a developer of advanced nuclear technology supported initially by OpenAI co-founder Sam Altman. Oklo’s stock price soared nearly 3,000% over a little more than a year, underscoring the speculative fervor in the space.

Nevertheless, the sector’s challenges have tempered investment enthusiasm. UBS recently downgraded NuScale to a “sell” rating, citing concerns about the company’s path to profitability despite its relatively advanced reactor designs. Similarly, X-Energy, a modular reactor and nuclear fuel company supported by Amazon, saw its stock price fall by more than half after an initial 23% gain on its first day of trading earlier this year.

Given the volatility and risks facing nuclear technology developers, investors have sought a more stable approach by focusing on established utility companies that operate fleets of nuclear reactors and generate consistent profits. These larger utilities offer a less speculative way to gain exposure to nuclear energy as the market continues to evolve.