OKLO vs. SO: Which Nuclear Stock Has Better Risk-Reward?

Nuclear power is back in focus as artificial intelligence and data centers drive unprecedented electricity demand. Investors are increasingly weighing emerging advanced reactor developers against established regulated utilities with proven nuclear operations.

Oklo Inc. OKLO represents a high-risk, high-reward bet on next-generation small reactors tied to hyperscaler demand. The Southern Company SO, by contrast, offers income stability and visible earnings growth backed by regulated assets and decades of operating experience.

The Case for OKLO

OKLO is building a utility-like model centered on owning and operating Aurora small nuclear plants rather than selling reactor designs. Revenues are expected to come from long-term power purchase agreements once plants are operational.

A key validation came through a 1.2-gigawatt agreement with Meta Platforms META to develop an advanced nuclear campus in Ohio. Pre-construction work is targeted for 2026, with initial power delivery around 2030 and full buildout by 2034. The agreement includes a prepayment mechanism that supports early development and fuel procurement, improving capital visibility.

Liquidity is another strength. Following expanded at-the-market programs totaling around $2 billion, OKLO holds roughly $1.2 billion in cash. With annual operating cash outflow guidance of $65 million to $80 million, the company appears funded for several years of licensing and development activity.

However, risks are elevated. The Nuclear Regulatory Commission previously rejected its reactor application, and further approvals remain critical. On a somewhat positive note, the company is using a combined license pathway under Part 52, which covers both construction and operation in a single application, aligning with its build-own-operate model. By standardizing filings and reusing key safety documents, including for its Aurora-INL project now under review, OKLO aims to reduce delays and improve timeline visibility.

Finally, 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. Meaningful revenue remains unlikely before late 2027 or 2028, keeping earnings negative in the interim.

The Case for Southern Company

Southern Company offers a sharply different profile. The regulated utility delivered 2025 adjusted earnings per share of $4.30, up 6% year over year, marking its 11th consecutive year at or above guidance.

Management now guides earnings per share of $4.50 to $4.60 for 2026, implying roughly 7% growth, followed by 8% growth in 2027 and approximately 9% in 2028. Earnings are projected to expand 7% to 8% annually beyond 2028.

Load growth is accelerating, driven by data centers and industrial expansion. Retail electric sales rose 1.7% in 2025, while commercial sales are expected to grow roughly 20% annually through 2030. The company has 26 signed contracts totaling 10 gigawatts, with an additional 3 gigawatts nearing execution. Importantly, long-term 15-year contracts guarantee that all additional costs are fully covered, reducing financial risk.

Southern’s five-year capital plan has increased to $81 billion, with 95% allocated to regulated utilities. This supports the projected 9% average annual rate base growth. More than 90% of earnings come from regulated operations, providing stability as the company executes its expansion.

Key risks include managing large capital projects and continuing to raise money by issuing new shares. The company raised $9 billion in equity in 2025 and expects to raise another $2 billion by 2030. While this helps maintain a strong balance sheet, issuing more shares can dilute existing shareholders and may limit earnings growth per share if overall growth slows.

Price Performance

Over the past three months, SO shares have gained more than 6%, while OKLO has declined 25.3%. The divergence highlights investor preference for earnings visibility and regulated stability in a volatile environment. OKLO’s pullback reflects sensitivity to execution timelines and long-dated revenue expectations.

Valuation

Based on trailing 12-month price-to-book ratios, The Southern Company trades less than 3 times book value, while OKLO changes hands at 8.6 times. The premium valuation for OKLO underscores its future-growth narrative tied to advanced reactors and AI-driven demand. In contrast, Southern Company’s lower multiple reflects its mature, regulated profile with steadier returns.

Earnings Outlook

The Zacks Consensus Estimate for Southern Company’s 2026 earnings indicates 6.5% growth, followed by 7.3% growth in 2027.

OKLO, still pre-revenue and loss-making, is projected to show a 5.5% earnings decline in 2026. The company has also missed consensus estimates in three of the past four quarters, with an average negative surprise of roughly 20%.

The earnings contrast is stark. Southern generates steady profits today and projects multi-year growth. OKLO remains dependent on regulatory milestones and capital markets before meaningful earnings materialize.

Conclusion

Both companies offer exposure to rising electricity demand fueled by artificial intelligence and industrial expansion, but their risk profiles differ dramatically.

Southern Company carries a Zacks Rank #3 (Hold) and is better positioned than OKLO, which holds a Zacks Rank #4 (Sell). Southern combines regulated earnings visibility, accelerating load growth, and disciplined capital deployment. OKLO’s long-dated revenue model, regulatory uncertainty and ongoing losses create a far more speculative setup at this stage. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research