Jim Cramer, host of Mad Money, recently cautioned investors about the risks of speculating in sectors like nuclear power and quantum computing, suggesting it could take a long time before these fields generate meaningful returns. While Cramer acknowledged the optimism that accompanies the start of each new year, he pointed out that sometimes the enthusiasm surrounding certain industries is misplaced.
“This year, I see two themes that I want to caution people about: nuclear power and quantum computing. Both have promise, someday, but that day is not, just not near enough to justify the current valuations for these stocks.”
He clarified that while he does not view quantum computing as a hoax, he considers the current expectations surrounding the technology to be overly ambitious. The market, according to Cramer, is setting a low bar for progress in this area.
READ ALSO 10 S&P 500 Stocks on Jim Cramer’s Radar and Jim Cramer Discussed These 7 Stocks
“Look, I believe in nuclear power, but when GE Vernova, the company that arguably has the most to gain from it, says discouraging things about an uptick in commercial nuclear power coming any time soon, when quantum computing seems very much in its infancy, well, I fear people will get hurt speculating on even the biggest companies, let alone the smaller ones.”
The outlook for quantum computing became more uncertain last week when Nvidia CEO Jensen Huang stated that “very useful” quantum computers are at least a decade away. During a Q&A at Nvidia’s Consumer Electronics Show Financial Analyst event, Huang suggested that 15 years might be an optimistic estimate, while 30 years could be more realistic. This timeline left little room for optimism among investors who had hoped for quicker breakthroughs.
Cramer acknowledged the speculative nature of these sectors but advised investors to be cautious and realistic about the potential for short-term gains.
“You can speculate of course, but please understand that, like at all New Years, the animal spirits are in play for a few stocks and I don’t want you to be trampled by wayward bulls with visions of riches in front of their greedy eyes. You own Rigetti?… Take some gains and then go out and buy yourself a nice cashmere sweater.”
Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks
9. Oklo Inc. (NYSE:OKLO)
Number of Hedge Fund Holders: N/A
Highlighting investors’ enthusiasm about nuclear power companies like Oklo Inc. (NYSE:OKLO), Cramer said:
“When it comes to nuclear power over-enthusiasm, we’ve seen some of these smaller companies that offer alternatives to the current plants, they worry me. Companies like Oklo with nuclear fission capabilities, NuScale Power with small form factor technology, they’re exciting, but they’re also years from developing anything meaningful. Or as my friend Michael Cembalest. chair of the Market and Investment Strategy group at J.P. Morgan wrote in his… 2025 outlook, ‘What nuclear renaissance? Wake me when we get there.”
Oklo (NYSE:OKLO) is a company focused on designing and developing fission power plants to deliver reliable, commercial-scale energy. In addition to power generation, it also offers used nuclear fuel recycling services. In May 2024, the company went public through a special purpose acquisition company (SPAC), AltC Acquisition Corp., which is owned by Sam Altman, co-founder of OpenAI.
The company is positioning itself around the idea that nuclear waste contains enough energy to meet the projected energy demands of the U.S. for the next century. However, it faces several significant challenges. Despite its innovative approach, the company continues to burn cash and is unlikely to reach profitability in the near future. Its reactor design, while novel, still needs to prove its commercial viability, and Oklo has yet to deploy a reactor.
The company is targeting 2027 for the launch of its first plant at the Idaho National Laboratory in Idaho Falls. As of the third quarter, Oklo (NYSE:OKLO) reported using $24.9 million in cash for operating activities year-to-date, including a net loss of $63.3 million, which was partly driven by a $2.2 million increase in working capital due to lower accounts payable. Looking ahead, for the full year of 2024, it expects to use between $35 million and $45 million in cash for operating activities, along with a forecasted operating loss of $40 million to $50 million.
8. Quantum Computing Inc. (NASDAQ:QUBT)
Number of Hedge Fund Holders: 2
Talking about Quantum Computing Inc. (NASDAQ:QUBT), Cramer said:
“I’m also concerned about a company called Quantum Computing, $2.4 billion, with $400,000 in revenues in the last 12 months and again, very big losses.”
Quantum Computing (NASDAQ:QUBT) offers portable quantum machines, including Dirac systems and quantum random number generators, along with quantum authentication solutions for enhanced cybersecurity. Despite a significant stock increase of over 1,900% in 2024, this surge in value is largely disconnected from the company’s underlying business performance. The company currently reports a modest revenue of $386,000 over the past twelve months, a figure that remains relatively small in comparison to the company’s ambitions.
Like many quantum computing firms, the stock is considered high-risk, with its future largely influenced by technological advancements, costs, and the potential for commercial sales of quantum computers in the coming years. However, Quantum Computing (NASDAQ:QUBT) continues to face challenges, having reported an operating loss of $25 million over the last twelve months, highlighting the financial hurdles it must overcome.