Potential £10 billion ($13.5 billion) opportunity forming around Rolls-Royce10 Jun 2025 19:53
Morgan Stanley sees a potential £10 billion ($13.5 billion) opportunity forming around Rolls-Royce Holdings Plc (RYCEY, Financial), after the UK selected the company to lead the development of its first small modular reactors (SMRs). Analyst Ross Law currently values the SMR business at just £1 billion—but believes that could change quickly once firm contracts are signed and upfront payments start flowing. While shares initially surged to a record high on the news before pulling back, Law flagged this as an “important milestone” that could reshape market perception and open doors for export opportunities.
It's early days, and revenue likely won't show up meaningfully until the 2030s—but that might not stop the market from assigning value sooner. Qatar Investment Authority, Constellation Generation Ltd., BNF Resources, and CEZ AS are already backing the project. And with memorandums of understanding in place with Estonia, Turkey, and the Czech Republic, there's a clear signal that interest is building beyond the UK. Law's £10 billion projection doesn't even factor in aftermarket services or broader international opportunities, suggesting real upside if things break right.
Still, execution will be everything. Rolls-Royce needs to deliver reactors that are both cheaper and less complex than traditional plants—no easy feat. The collapse of NuScale's U.S. project last year, due to ballooning costs, is a reminder of what's at stake. But if Rolls-Royce turns government support into a scalable product that travels well, the SMR story could evolve into a long-term growth engine for the business. Investors will be watching closely for the first commercial breakthroughs.
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