If the boss of Rolls-Royce Holdings (LSE:RR.) is right, small modular reactors (SMRs) could help push the group’s share price towards £30. But how realistic is another doubling? After all, the stock’s already risen 934% since October 2021 and trades on a generous 34 times forecast 2026 earnings.

Let’s investigate.

Going nuclear

In 2025, its CEO Tufan Erginbilgiç claimed there’s “no private company in the world with the nuclear capability we have. If we are not [the] market leader globally, we did something wrong.”

As a result, he said the group had the “potential” to become the UK’s most valuable listed company. At the moment (6 October), this requires a market-cap of around £247bn. If realised, the group’s shares would be worth just over twice what they are today.

In short, the investment case rests on supplying factory-built mini nuclear power stations to AI data centre operators. With existing grid infrastructure unable to keep pace with the demand for power, SMRs could be the answer.

Some estimate that the world will need up to 1,000 SMRs by 2050. At a cost of £2.2bn each, if Rolls-Royce supplied a fifth of these at a 20% margin, it could add £4.4bn annually to its bottom line over two decades. This excludes any maintenance or operating revenue.

Apply a multiple of 34 to this figure and nearly £150bn could be added to the group’s stock market valuation. Does this seem likely?

AI growth

Well, if the group’s latest results are anything to go by, it seems as though it’s going in the right direction. In July, it said it “has now been successful in every competitive European nuclear tender”.

However, the technology’s not yet commercially viable. Indeed, there’s a risk that investors have placed too high a premium on SMRs. If there’s any indication that their expectations aren’t going to be met there could be a major share price wobble. This would probably be a significant market correction given that the group already attracts a generous valuation.

But even if SMRs don’t deliver as hoped, the group’s existing power systems business is benefitting from huge investment in the AI sector.

Rolls-Royce already provides back-up power solutions as well as its Series 4000 gas reciprocating engines for use as a primary source of power. It says it’s experiencing “strong growth… led by data centres”.

The group recently upgraded its divisional revenue growth forecasts from 20% to 25% a year for the remainder of the decade. Of course, the business unit would be affected if AI growth stalls but, at the moment, there’s no sign of this happening.

My view

Positively for shareholders, Rolls-Royce has many more strings to its bow than just SMRs, which is why I think it’s a stock to consider.

Its widebody aircraft engine business has recovered strongly from the pandemic and it’s planning to re-enter the narrowbody market. Also, its defence business is growing strongly due to increased geopolitical uncertainty. Mini nuclear power stations could be the icing on the cake.

Even if the group doesn’t become the country’s most valuable, I think it will be worth a lot more than it is today if its SMR programme proves successful.

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James Beard owns shares in Rolls-Royce Holdings plc.