The speculative surge that propelled modular nuclear reactor companies to dizzying heights has come to an abrupt end, wiping out billions in market value and handing short sellers a massive payday. According to data services firm S3 Partners, funds have collectively reaped approximately $2.1 billion in profits over the past year by betting against three key stocks: US-listed NuScale Power, Nano Nuclear, and Oklo, the latter backed by Sam Altman.

All three companies are currently loss-making, generating minimal or no actual revenue. Last year, the market's intense focus on nuclear energy as a solution for AI hyperscalers' surging power demands drove investors to pile into these stocks, sending share prices soaring. The Trump administration's regulatory adjustments and funding support announcements further fueled the sector's rally.

However, since share prices peaked in October, concerns have mounted over these companies' ability to generate near-term revenue and the lengthy construction timelines associated with the technology. The combined market value of the three firms has since evaporated by $30.3 billion.

Adam Stein, nuclear innovation director at climate and energy think tank the Breakthrough Institute, said: "These stocks are purely driven by speculative trading, with valuations stretched far beyond fundamentals." He added that the industry experienced a "textbook hype cycle" last year. "This is typical for early-stage companies that have yet to establish a stable revenue stream."

Small modular reactors (SMRs) are pre-fabricated in modules at factories to save time and costs, with output capacities of around 300 megawatts or less, compared to traditional reactors which can exceed 1,000 megawatts. Short sellers have been betting on declines in these stocks, arguing that limited free float and excessive focus on potential AI-driven demand have pushed valuations to unsustainable levels, while ignoring the time and capital expenditure required to commercialize the technology.

Christian Puetz, founder and CEO of investment firm ARR Investment Partners, said: "On one hand, there's some government support, and nobody wants to bet against Trump; on the other hand, last year saw extreme optimism around the AI demand narrative." Puetz had previously shorted Oklo but has since closed his position. S&P Global Market Intelligence data shows that approximately 18% of the free float for Oklo and NuScale remains on loan for short selling, while Nano Nuclear's short interest is near 30%.

Meanwhile, X-energy, which listed in April and experienced a sharp rally, has seen its market value shrink by $5.8 billion. According to S3 Partners, short sellers have accumulated approximately $67 million in profits from betting against the company since mid-May. The company, backed by Amazon and Ken Griffin, has yet to receive full construction regulatory approval for its helium-cooled reactor, with short interest at 9%.

Puetz noted: "Market sentiment has shifted this year, and investors have become far more cautious." These companies "will generate almost no revenue in the foreseeable future, and on top of that, they face extremely high capital expenditure pressures."