Small modular reactors (SMRs) have been hyped for decades but never deployed commercially in the United States, yet a new wave of AI-driven energy demand is attracting billions in venture capital to finally make them work. As artificial intelligence data centers consume ever-larger amounts of electricity, tech giants and investors are racing to unlock next-generation nuclear power to meet the demand without abandoning climate goals. Applied Atomics, a startup founded by engineers with SpaceX backgrounds, is now attempting to prove that SMRs can transition from laboratory concept to commercial reality by reviving an abandoned test facility in Virginia.

Why Are Tech Companies Suddenly Betting on Nuclear Power?

The numbers tell the story. A single hyperscale data center can consume as much electricity as 50,000 homes, according to the MIT Energy Initiative. U.S. data centers already consumed more than 4% of the country's total electricity in 2023, and that fraction is projected to rise to 9% by 2030. This explosive growth is forcing technology companies and policymakers to rethink how America generates power. Traditional renewable energy sources alone cannot keep pace with the demand, creating an opening for nuclear energy to re-enter the conversation as a carbon-free alternative.

The investment response has been swift and substantial. Global investment in both nuclear fission and fusion startups topped $4.5 billion across 81 companies in 2026 so far, according to reporting from Axios cited in the source material. At this rate, 2026 is on track to shatter the previous annual record of $6.2 billion invested across 93 companies in 2025. Major figures from Silicon Valley, including Microsoft founder Bill Gates and OpenAI CEO Sam Altman, are throwing their weight behind nuclear energy advancement as a solution to the energy crisis created by AI.

What Makes Small Modular Reactors Different From Traditional Nuclear Plants?

Traditional nuclear power plants are enormously expensive and time-consuming to build. Georgia's Plant Vogtle, the newest traditional nuclear power plant in the United States, finally came online in 2024 after years of delays and billions of dollars in cost overruns. This track record has scared away many policymakers and investors from large-scale nuclear development. SMRs promise a different path forward by offering several advantages over conventional reactors.

• Lower Capital Costs: SMRs are designed to be cheaper to construct than traditional nuclear plants, making them more accessible to a wider range of investors and operators.
• Faster Construction Timelines: Smaller reactors can theoretically be built and deployed more quickly than massive conventional plants, reducing the time between investment and power generation.
• Flexible Deployment: SMRs can be deployed in smaller communities or paired with industrial facilities like data centers, rather than requiring massive centralized infrastructure.

However, SMRs have struggled to deliver on their considerable hype. While billions of dollars have been invested in developing the technology, and the Nuclear Regulatory Commission approved NuScale's uprated SMR design last year, there are still zero commercial SMRs operating anywhere in the United States. Some experts have begun to question whether the technology will ever move beyond the laboratory.

How Is Applied Atomics Attempting to Commercialize SMR Technology?

Applied Atomics is taking a pragmatic approach by leveraging existing infrastructure rather than starting from scratch. The company is reviving an abandoned SMR test facility in Virginia that was originally developed by BWXT, a major defense and nuclear contractor. The facility had already received $400 million in investment and significant research effort before being shelved, giving Applied Atomics a substantial head start.

"We're standing on the shoulders of giants here, right? We're starting with something that had $400 million in investment put into it, and significant time and effort. That's a leg up," said Ben Kellie, co-founder of Applied Atomics.

Ben Kellie, Co-founder at Applied Atomics

The company's leadership brings credibility from the aerospace industry, where rapid iteration and cost control are essential. By working with proven designs and existing test infrastructure, Applied Atomics hopes to avoid the cost overruns and delays that have plagued traditional nuclear projects. Whether this particular project succeeds or not, it will provide valuable data in a field where hard numbers have been scarce.

What Obstacles Still Stand in the Way of SMR Commercialization?

Despite the renewed investment interest, significant challenges remain. David Schlissel, a longtime nuclear consultant to consumer and environmental groups, emphasized that technological viability is only half the battle. The real question is whether SMRs can be built at a cost that makes economic sense for operators and investors.

"It is not just about whether the technology is viable. It is also whether the cost is viable. The industry is running around with all this hype trying to sell nuclear broadly. But they still have not fully tested and built any of these new reactors," explained David Schlissel, nuclear consultant.

David Schlissel, Nuclear Consultant to Consumer and Environmental Groups

The lack of any operating commercial SMRs in the United States means that cost projections remain theoretical. Developers have made optimistic claims about construction timelines and expenses, but these have never been tested in the real world. Regulators, investors, and utilities will need to see actual performance data before committing to large-scale deployment. The AI energy boom may provide the financial incentive needed to finally push SMRs across the finish line, but only if the technology can prove itself both technically sound and economically competitive.

The race to power artificial intelligence is reshaping America's energy landscape in real time. Whether small modular reactors become a cornerstone of that new infrastructure or remain a perpetual promise depends on whether companies like Applied Atomics can convert decades of research and hundreds of millions in investment into a working, profitable commercial product.