[1 Stock Per Day PLUS] The ‘Calendar Distortion’ of the October Market and the Truth About AI Power. Exposing the Financial Reality of SMRs and the True Winners of ‘Ready-to-Use Energy’ That Dominate Long-Term Contracts with Hyperscalers

Hello, this is Hal.

Thank you for always reading my note.

Entering October, the U.S. stock market is once again facing a phase of heightened volatility. With the upside of major indices becoming heavy and adjustment movements appearing in the tech and AI-related stocks that have driven the market so far, I believe many of you are growing anxious, wondering, ‘Has the entire market begun to collapse?’ or ‘Was the AI market just a temporary bubble?’

Every year when October arrives, the market discusses a sense of caution as a vague anomaly, along with memories of historical market crashes. However, if you dismiss sharp fluctuations in stock prices as merely a deterioration in market sentiment or a harbinger of recession, you will misread the essential movement of capital occurring on the ground.

There is a clear institutional factor behind the downward pressure observed in the market in October. Due to the convergence of the fiscal year-end for mutual funds mandated by U.S. tax law, the blackout period when corporate share buybacks are halted, and the mathematical hedging behavior in the derivatives market, a structural schedule is built in from the start where ‘mechanical selling’ is executed regardless of corporate performance.

Institutional investors coldly understand this calendar distortion and view the decline phase, where the masses fall into panic, as an opportunity to buy at a low price the core stocks whose future profit growth is guaranteed.

So, where are they planning to allocate capital during this October adjustment?

The answer is ‘ready-to-use baseload power’, which has become the final bottleneck in the AI development race.

Currently, the expansion of AI data centers is facing a physical wall of connection delays to the power grid. While SMR (Small Modular Reactor) related stocks are gathering attention as the next-generation savior, scrutinizing their financial statements reveals the harsh reality of massive cash burn and stock dilution that must be overcome before commercialization. Giant technology companies rushing AI development do not have the luxury of waiting until the 2030s.

What institutional investors are actually buying is not uncertain future technology, but existing power generators that can supply large amounts of power right now and have secured 20-year long-term fixed contracts with high premiums from hyperscalers.

In this article, first, I will clarify with data the tax system and market structure distortions driving the October decline, and at the same time, objectively verify the risks from the balance sheets of SMR-specialized companies.

Then, I will delve into the two winning independent power producers (IPPs) that boast overwhelming free cash flow and pricing power, narrowed down through multi-stage screening covering power companies across the United States. I have summarized in detail the latest valuation assessments and the optimal entry timing that will come in late October.

I hope you will use this as a basis for judgment to block out emotional noise and build a rational investment strategy based on institutional facts and financial data.

First, let’s look at the timeline of price collapses that repeat every year in the October market.

Chapter 1: The Price Collapse Caused by the Calendar and the Mechanism of Bottoming Out

Every year in October, negative sentiment tends to spread in the stock market due to memories of past crashes. However, when you objectively unravel the data and market structure, you can see that this downward pressure is not due to investor fear or macroeconomic deterioration, but is a chain of ‘mechanical selling’ determined by law and system.

The biggest factor distorting the October market is the tax-related fiscal year-end faced by U.S. mutual funds. Under Section 4982 of the U.S. Internal Revenue Code, many funds are effectively required to set October 31st as the end of their capital gains calculation period. To avoid a 4% penalty tax on undistributed income, they are forced to execute tax-loss selling by selling off stocks in their portfolios that are holding unrealized losses by this date to offset gains.

The targets of this tax-loss selling are stocks that have performed poorly recently, regardless of whether their performance is good or bad. Even excellent companies with absolutely no problems in their fundamentals will be mechanically sold off simply for the convenience of the fund’s tax measures.

What makes the situation worse is the depletion of liquidity in the market. Mid-October falls right before the third-quarter earnings announcements, which perfectly overlaps with the blackout period when listed companies are prohibited by rule from buying back their own shares. At a time when the U.S. market’s biggest buyer, the companies themselves, has exited the market, selling pressure from funds rushes in all at once, creating a vacuum where stock prices fall significantly with much less selling volume than usual.

And what amplifies this decline into a sharp drop like a flash crash is the expiration date of options trading set for the third Friday of October. When the stock price falls below a certain level, market makers who provide liquidity to the options market are forced into a mathematical structure where they must sell short in the direction of the decline to keep their own portfolio risks neutral.

Fund tax-loss selling, the suspension of share buybacks, and hedge selling in the options market. The convergence of these three factors creates the unreasonable downward trend characteristic of October.

However, this conversely means that there is a period where excellent stocks are unfairly left undervalued due to ‘calendar convenience’ that has nothing to do with a company’s true business value. In particular, even robust infrastructure companies that are promised massive amounts of cash from giant technology firms as the solution to the biggest bottleneck in current AI development tend to get caught up in temporary selling during this period.

Professional institutional investors accurately grasp the timeline where selling pressure peaks from mid-to-late October, and they are vigilantly waiting for the moment when fund selling dries up and share buybacks resume.

In the following chapters, we will delve into the ‘true investment targets’ where we should allocate capital during this unfair downturn. We will expose the financial traps of the next-generation energy stocks that the masses are obsessed with in the AI market, and close in on the prime companies that are secretly earning massive amounts of cash behind the scenes and are prepared to become market winners.

Chapter 2: The ‘Final Bottleneck’ of AI Infrastructure and the Financial Reality of SMRs

As confirmed in Chapter 1, the October decline is merely temporary noise caused by structural distortions in the market. So, what is the essential investment theme we should really be looking at during this phase?

Many market participants continue to focus on semiconductor performance improvements and the massive investments of giant technology companies. However, the most serious constraint in AI development today is not a lack of computing power, but the shortage of baseload power required to physically operate data centers.

Regarding this power issue, there is a decisive gap in perception between the masses in the stock market and professional institutional investors.

Grid Limitations and the Wall of Behind-the-Meter Regulation

Many in the public tend to think, ‘If power demand increases, power companies will just build power plants to solve it.’ However, reality is not that simple. The biggest barrier is not the construction of power plants themselves, but the approval process for physically connecting to the national power grid.

According to confirmed data from the Lawrence Berkeley National Laboratory, the waiting period for grid connection in the U.S. is lengthening year by year, with the median time from application to commercial operation exceeding 61 months, or five years. Furthermore, in the PJM region, the largest power grid in the U.S. which hosts clusters of data centers, the situation has fallen into a state where it takes an average of over eight years from approval to operation. The procurement period for large transformers essential for grid reinforcement has also extended to nearly four years, making power procurement via the grid physically gridlocked.

To avoid this desperate connection delay, giant technology companies rushed to sign contracts to directly co-locate data centers within the premises of existing nuclear power plants and the like, without going through the public power grid. However, the Federal Energy Regulatory Commission intervened even against this loophole.

Regulators viewed the contract structure of drawing power directly without paying for grid maintenance costs as problematic and introduced strict regulatory frameworks to prevent costs from being passed on to the general public. As a result, the method of completely avoiding grid costs to obtain cheap power has been institutionally blocked, and the hurdles for power procurement have become even higher.

The Financial Reality of SMR Concept Stocks That the Masses Are Flocking To

Amid reports of grid tightening, what is gathering enthusiastic buying in the market are SMRs, or small modular reactor developers, which are expected to be the next generation of energy. While they are spectacularly talked about in media and social media as the ‘prime solution for AI power,’ when you open the latest financial statements they have submitted to the Securities and Exchange Commission, cold, hard numbers that are far from market expectations are lined up there.

Let’s look at the confirmed financial data of representative SMR developers.

• NuScale Power (SMR)

  • Although they are a leading company that has obtained design certification from the U.S. Nuclear Regulatory Commission, their operating cash flow for the first half of 2026 is a massive deficit of $372.86 million. Sales for the same period were only $75,000, and they are in a pre-revenue state where revenue from commercial power sales is effectively zero. To cover this deficit, the company has repeatedly issued new shares in the stock market, and the number of outstanding shares has increased by approximately 74% over the last two years.

• Oklo (OKLO)

  • Also attracting attention for power supply agreements with major technology companies, the company’s operating cash flow for the first half of 2026 is a deficit of $65.45 million. Sales were only $1.21 million from engineering services, and their liquidity on hand depends on funds raised through stock sales. Since their SPAC listing, the number of outstanding shares has already increased by more than 34%, and they have set a new share issuance limit of up to $1 billion for the future.

For both companies, the commercial operation target for the first unit is announced to be no earlier than 2028 to 2029. However, considering the strict regulatory reviews unique to nuclear power and the risk of cost inflation associated with the construction of the first unit, the reality is that the period for generating stable revenue and free cash flow is highly likely to slip into the 2030s or later.

SMR-specialized companies are in a state where they are forcing existing shareholders to bear the burden of massive research and development expenses and regulatory compliance costs that are occurring in real-time. For giant technology companies that are rushing to expand computing resources on a monthly basis, there is no option to wait for uncertain technology completion in the 2030s.

The true winners of ‘immediate-use energy’ that institutional investors are pouring capital into

What professional institutional investors are valuing is not a dream story ten years away, but operators that possess large-capacity power sources that can be operated immediately and can legally clear regulatory hurdles.

However, it is not the case that any company capable of supplying power will do.

In the U.S. power sector, there are many large utility companies whose profit margins are capped at around 10% by state regulations and whose free cash flow is constantly in the red due to massive investments for data centers. If you choose power stocks based solely on superficial themes, you risk getting caught up in the burden of enormous capital expenditures.

What we should target are extremely rare companies that meet all of the following conditions:

1. Possessing nuclear or high-efficiency gas power plants that have already finished depreciation, allowing for minimal additional capital expenditure.

2. Having no regulatory profit caps and being able to extract premium prices from hyperscalers that significantly exceed market rates.

3. Being able to convert the historic surge in capacity prices occurring in the largest power market in the U.S. directly into pure cash on hand.

As a result of conducting multi-stage screening on all publicly traded energy companies in the U.S. regarding regulatory resilience, contractual binding power, and cash flow generation capability, only two companies were narrowed down that cleared these rigorous criteria.

🔒 The following is a paid area

In the paid area, we will completely eliminate emotions and market noise, and thoroughly dissect the two true winners among independent power producers selected by data.

• Chapter 3: Financial Structure of the 2 ‘True Winners’ Narrowed Down by Multi-Stage Screening

  • We will expose the structure of the free cash flow deficit that large utility companies fall into, and prove from financial statements why only these two companies are able to monopolize a free cash flow margin of over 12% and 20-year fixed contracts with hyperscalers.

• Chapter 4: Appropriate Valuation Calculated Backwards from Fixed PPAs and Capacity Market Surges

  • We will objectively evaluate the current undervaluation and upside potential of the stock price based on how many dollars the historic surge in the PJM capacity market will specifically boost the annual profits of these two companies, and the annual cash flow floor guarantee of over $4 billion brought by long-term contracts with Microsoft and Meta.

• Chapter 5: The Optimal Entry Timing Brought by the October Calendar

  • By overlaying supply and demand schedules such as the passing of option expiration dates, mutual fund tax-loss selling deadlines, and the lifting of stock buyback blackouts, we will present the specific entry period in late October with the highest probability of success.

Please use this as a basis for judgment to turn the market fluctuations peculiar to October into an opportunity to incorporate high-quality assets with definitive cash-generating power at a fair price.

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