Small modular reactors (SMRs) are increasingly being positioned as a practical power source for the expanding artificial intelligence ecosystem and hyperscaler infrastructure, according to a Thursday report from Bernstein. The firm highlights the alignment between the continuous, high-density electricity requirements of data centers and the operational characteristics of SMRs.
Data centers demand uninterrupted, year-round power at high density, placing growing structural strain on electrical grids around the world. SMRs offer characteristics that match these needs: compact footprints, modular construction techniques, and the ability to supply 24/7 carbon-free baseload electricity. The report notes that a meaningful number of commercial agreements have already been signed between SMR developers and hyperscalers to accelerate project development.
Where SMRs had long been discussed as conceptual designs, Bernstein observes that they are now advancing into an active build-out phase. Multiple SMR designs have moved into formal licensing processes, some are advancing through construction, and a number are beginning to show manufacturing capabilities. The report underscores closer coordination among regulatory bodies, national laboratories, and private developers, supported by clearer technology and regulatory pathways.
Regulatory change is a key driver of the accelerated deployment timeline. Since 2025, the United States has shortened approval timelines that previously stretched over multiple years - from 3-5+ years down to fixed 12-18 month windows. The Department of Energy's Reactor Pilot Program provides a complementary fast-track route on federal sites, along with cost-share funding and support for critical fuel supply. Together, these measures create a more enabling environment for SMR projects.
Cost competitiveness remains at the center of the debate. Early SMR projects have experienced capital expenditures that exceeded initial estimates, driven by inflation, labor costs, and supply chain pressures, with some projects seeing costs triple or increase by even larger multiples. Bernstein stresses, however, that there is a credible pathway to significant cost reductions as deployment scales. Learning curve effects and economies of scale from mass production could materially lower unit costs and potentially bring SMRs into cost parity with larger reactors.
Government subsidies and lower financing costs are expected to play an important role in early deployment and in improving returns for developers and investors. Bernstein estimates that at scale SMRs could realize up to a 70% reduction in cost, which would position them competitively against major power sources in current markets.
The report presents a projected expansion of global SMR capacity based on the current pipeline of projects under construction or already approved. Bernstein forecasts capacity rising from 280 MW in 2025 to roughly 4.2 GW by 2035, implying a compound annual growth rate of about 31%. Even with that growth, the report notes this would represent roughly 1% of today’s 377 GW global nuclear base, leaving substantial upside if more developers bring designs to market and if data center demand further accelerates nuclear procurement.
Taken together, Bernstein’s analysis frames SMRs as a technology moving from theory to tangible deployment, supported by regulatory reforms, commercial partnerships with hyperscalers, and a path toward cost reduction. Nonetheless, early cost overruns and the current small share of global nuclear capacity underscore that meaningful scale remains a multi-year effort.