3 Reasons OKLO Stock Isn't a Buy After 34% Monthly Drop

Oklo Inc. OKLO sits at the intersection of two powerful long-term trends: advanced nuclear energy and the explosive growth of artificial intelligence (AI). The company received a major credibility boost after announcing an agreement with Meta Platforms META to develop a 1.2-gigawatt advanced nuclear campus in Ohio to support data centers and AI infrastructure.

OKLO shares had previously surged to a 52-week high near $194 in October amid broader enthusiasm around nuclear power and AI-driven electricity demand. However, the stock has since pulled back significantly and has declined more than 30% in recent weeks, as investors reassess valuation, timelines and execution risks. While the recent decline may tempt dip buyers seeking exposure to the AI-powered nuclear theme, OKLO is not a classic buy-the-dip opportunity for several fundamental reasons.

OKLO’s AI Ambitions and META Validation

The META agreement marked a turning point in OKLO’s long-term narrative. Under the deal, OKLO will develop a 1.2-gigawatt advanced nuclear campus in Ohio designed to support META’s expanding AI and data center footprint. Pre-construction activities are expected to begin in 2026, with the first phase potentially operational around 2030 and full delivery targeted by 2034. META included a prepayment mechanism that provides upfront funding for early development and fuel procurement, reducing some financing uncertainty and improving capital visibility.

META’s broader nuclear push reinforces the strategic importance of this partnership. As AI workloads surge, hyperscalers increasingly require firm, carbon-free baseload power. However, even with META’s backing, OKLO remains years away from meaningful revenue generation. Nuclear development is inherently long-dated, involving regulatory approvals, engineering hurdles, and substantial capital requirements.

Volatile Price Action Reflects Speculative Positioning Around OKLO

OKLO’s recent share performance highlights how sentiment-driven the stock remains. After climbing to $193.84 in October amid excitement around AI energy demand and advanced nuclear technology, shares have retreated sharply and are down 33.8% over the past month. The volatility underscores that investors are reacting more to headlines and thematic enthusiasm than to tangible financial progress.

Despite the META deal providing validation, the market appears to be reassessing how much future success is already priced into the stock. As of now, OKLO is trading at more than 8 times book value — significantly higher than its subindustry — despite having no commercial reactors in operation. This premium valuation leaves little room for delays or setbacks — both of which are common in nuclear projects.

OKLO’s Pre-Revenue Status and Earnings Risk

The most significant hurdle for OKLO remains its financial profile. The company is still pre-revenue and generates no income from operating reactors. In the third quarter of 2025, OKLO reported a loss of 20 cents per share and has missed the Zacks Consensus Estimate in three of the past four quarters, with an average negative surprise of roughly 20%. Losses are expected to continue as the company advances licensing and construction milestones.

Although OKLO expanded its cash position to roughly $410 million as of the end of Q3 2025, free cash flow remains negative and quarterly losses persist. The company is dependent on capital markets and structured agreements like the one with META to fund operations. While the prepayment structure improves funding visibility, it does not eliminate execution or regulatory risks.

In contrast, established nuclear operator Constellation Energy CEG offers exposure to the same AI-driven power demand theme with far less uncertainty. CEG generates billions in annual revenues and stable cash flow from its fleet of nuclear and natural gas plants. The company has secured long-term power agreements with Microsoft and META, positioning it as a core beneficiary of AI infrastructure growth.

Strong Industry Tailwinds, But Better Alternatives Exist

The broader backdrop for nuclear energy is undeniably strong. Generative AI can consume up to 10 times the energy of a traditional search query, contributing to projections that U.S. electricity demand could rise 75% to 100% by 2050. The U.S. government aims to quadruple nuclear capacity by 2050, offering tax credits and policy support to accelerate development.

Yet, there is a clear distinction between established operators and speculative developers. Constellation Energy has reinforced its leadership position through 20-year power agreements with hyperscalers like META and through its $27 billion acquisition of Calpine, expanding its natural gas and geothermal footprint. CEG has also increased its dividend by 25% in 2024 and another 10% in 2025, demonstrating financial strength and shareholder commitment.

OKLO, by comparison, is still in the early stages of commercializing its sodium-cooled liquid-metal reactor technology. While innovative, the technology carries engineering challenges and has yet to be proven at a commercial scale. The company is also pursuing additional initiatives, including a potential fuel facility in Tennessee and a military partnership in Alaska, further stretching capital and execution bandwidth.

Conclusion

OKLO represents an ambitious attempt to power the AI revolution through advanced nuclear technology, and its agreement with META provides meaningful validation of its long-term vision. However, the company remains pre-revenue, continues to post losses, faces long development timelines, and trades at a valuation that assumes significant future success. The recent stock decline does not materially reduce these risks, especially when compared to established players, such as Constellation Energy, which already generate stable earnings and cash flow while benefiting from the same AI-driven electricity demand trends supported by META. Given its speculative profile and ongoing financial uncertainty, OKLO stock is currently a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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