When it comes to the market’s language, few indicators are as powerful as price action to help retail investors understand what is happening underneath the hood of the broader themes in financial markets and industries within the United States economy. With this in mind, investors can connect price action to fundamental themes to ensure their potential investment ideas are closer to the top tier.

Over the past week, it looked like the market wanted to end the first month of 2025 by giving some energy names a further push higher. However, not all energy stocks are made equal, as there is one that clearly got a bit of preferential treatment from the market because of fundamental reasons that will make sense to investors in just a bit.

Shares of NuScale Power Co. (NYSE: SMR) rallied by 10% in one week alone to lead the energy sector. Compared to the broader Energy Select Sector SPDR Fund (NYSEARCA: XLE), which declined by 2.2% over the same period, investors can see how the market must have a strong justification for choosing this nuclear energy stock over all others.

It’s a Race for Nuclear Energy

While most of the stock market’s attention has centered around the technology sector, specifically the artificial intelligence developers, some traders have started to extrapolate what these trends will do to other areas like energy and infrastructure demand that will build over the development of this new technology.

Especially through the form of data centers and other infrastructure needs to enable growth in this area, which unfortunately cannot be supported in today’s energy grid setup. This is exactly why the industry’s largest names, such as Amazon.com Inc. (NASDAQ: AMZN), decided to start investing in nuclear energy projects recently.

Even after this bullish run over the past week, NuScale stock still trades at 87% of its 52-week high, meaning that investors have enough room in their potential positions to keep making new highs in this stock. As investors will see shortly, a couple of institutional buyers, not to mention traders in the market, agree with that outcome.

NuScale Stock Can Benefit From Oil’s Run

With analysts and markets also becoming bullish on oil names, such as Energy Transfer LP (NYSE: ET), one theme is clear for opening the path higher in nuclear energy. For Energy Transfer stock to rise, oil prices need to increase. However, higher fuel costs also pressure businesses and consumers to explore alternative energy sources.

This is where nuclear energy comes in as an alternative, on top of the broader tailwinds being created from the spurring up of data centers and other artificial intelligence infrastructure. Another gauge investors can look at is the consensus price target for FuelCell Energy Inc. (NASDAQ: FCEL), set at $10.23 a share for a 21.6% upside from where it trades today.

A consensus bullish view on these energy names will justify the current trends happening in NuScale stock, starting with recent buying activity and bearish capitulation, among other factors that investors need to keep in mind moving forward.

The Market’s Take on NuScale Stock

As of the fourth quarter of 2024, Swedbank had accumulated a net $40.5 million position in NuScale stock, or 1.4% ownership in the company. These buyers weren’t the only institutional players looking to get exposure in the nuclear run today, as those from Geode Capital Management also decided to build up a $21.2 million position in the company.

Knowing that the bigger players are starting to shift into NuScale stock recently and that the start of the nuclear bull run is just getting started, some bearish traders have also decided to shift their views and adjust their portfolios. By noticing a decline of up to 11.2% in short interest over the past month, a clear sign of bearish capitulation can be taken by retail investors.

More than that, today, NuScale stock’s valuation can serve as another gauge for investors to consider. The broader market is now willing to pay a price-to-book (P/B) ratio of up to 50.1x, a steep premium compared to the industry’s average of only 18.9x.

Most value investors would default to calling this stock expensive due to its valuation. However, others will understand that the market will always be ready to pay a premium for the stocks it believes will outperform peers and the industry in the coming months and quarters.