AI-exposed power stocks were swept away with tech’s sell-off Monday as advances in AI made by Chinese start-up DeepSeek raised questions over AI spending levels at US firms and their dominance of the market.
Constellation Energy (CEG), the most important nuclear plant operator within the US, tumbled a record 19%, while electricity generator Vistra Corp (VST) sank a record intraday of 29%. Power equipment maker and servicer GE Vernova (GEV) declined 21%. Even nuclear power startup Oklo (OKLO) tanked 21%.
DeepSeek, a Chinese AI startup, released a recent AI model on Jan. 20 that’s viewed as competitive with the chatbots of OpenAI and other US tech firms. It was also cheaper to make, requiring fewer AI chips than the models of larger players.
Big Tech’s insatiable energy requirements for data centers sent power stocks soaring in 2024 and into this 12 months, with Goldman Sachs estimating power demand will grow 160% by 2030.
Last 12 months, Constellation announced a nuclear power deal with software giant Microsoft to revive a unit at Three Mile Island in Pennsylvania. In December, social media giant Meta (META) released a request for proposals from nuclear energy developers to assist meet the corporate’s AI needs.
Constellation, Vistra, and GE Vernova all hit recent records just last week after President Donald Trump announced a recent $500 billion project — backed by SoftBank (SFTBY), Oracle (ORCL), and OpenAI.
Wall Street analysts pushed back against the market response on Monday.
“I do not think DeepSeek is doomsday for AI infrastructure,” Stacy Rasgon, Bernstein managing director and senior analyst, told Yahoo Finance on Monday.
“The models they [DeepSeek] built are implausible, they are surely they usually’ve pulled quite a lot of levers on efficiency, but what they’re doing just isn’t miraculous either, or unknown to other top AI researchers or AI labs which can be on the market,” he added.
Analysts expect to get more clarity later this week when Microsoft (MSFT) and Meta, two major spenders for AI data center infrastructure, are expected to report earnings.
Their outlooks may also likely impact AI chipmaker Nvidia (NVDA). It’s estimated greater than 40% of Nvidia’s revenue comes from Microsoft, Meta, Alphabet (GOOG, GOOGL), and Amazon (AMZN), in line with Bloomberg data.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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