Nuclear energy company Holtec suspended its planned U.S. initial public offering late on Wednesday, at a time when investors have increased scrutiny of vast capital being deployed in sectors related to AI.

Nuclear power has become closely tied to the AI boom as data centers demand a significant supply of reliable electricity.

​Holtec specializes in areas such as heat transfer and reactor components and is also developing small modular reactors, which are more advanced and scalable than conventional nuclear plants.

"Holtec's investment case is clearly tied to expectations for higher electricity demand from data centres," IPOX Research Associate Lukas Muehlbauer, told Reuters.

"It's like a perfect storm," CEO Krishna Singh, who founded Holtec in 1986, told the Financial Times. "Our business, rightly or wrongly, is viewed as connected to it (data centres)."

Investors' caution on whether vast capital deployed in AI can bring returns has led to a sharp turn against the data center economy in recent weeks.

The proposed listing, aiming to raise up to $900 million, was set to headline the first full week of the traditionally strong fall IPO window. Holtec said it would continue to evaluate the timing of the offering, but did not set a date. The offering was expected to price late Thursday.

The IPO pipeline should, however, remain active without any broad wave of postponements, Muehlbauer added. Several high-profile companies are reportedly slated to list this year, including Claude chatbot maker Anthropic, chipmaker Altera, SoftBank-backed SB Energy and smart ring maker Oura.

INVESTOR CAUTION SPREADS

The suspension, first reported by Bloomberg, is a setback for issuers from the nuclear sector, where stocks have had a tough run in recent months as markets have reassessed the outlook for AI-driven power demand.

CEOs of top AI labs have called for a coordinated slowdown in the development of increasingly powerful systems to allow more time to manage potential risks, adding to pressure on AI stocks from Tokyo to New York.

Muehlbauer flagged recent concerns around OpenAI and the pace of AI development, alongside a challenging interest rate environment and weak performance from Holtec's peers.

"The underlying demand for energy has not disappeared, but investors are becoming more selective about how much they are willing to pay today for future growth."

Stocks of nuclear energy companies that recently went public have been under pressure. Standard Nuclear, which debuted in July after downsizing its IPO, has seen its shares plunge 20.6% from the offer price through Wednesday's close. X-energy, which started trading in April, has lost more than a third of its listing-time market capitalization.

Broader markets have also been whipsawed in September by surging bond yields and a shift back toward tighter monetary policy, with the U.S. Federal Reserve delivering its first rate hike since 2023 this week.