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 companies and their dominance of the market.
Constellation Energy (CEG), the largest nuclear plant operator in the US, tumbled 21%, while electricity generator Vistra Corp (VST) sank by a record 28%. Power equipment maker and servicer GE Vernova (GEV) declined 21%. Even nuclear power startup Oklo (OKLO) tanked 25%.
DeepSeek released a new AI model on Jan. 20 that is viewed as competitive with the chatbots of OpenAI and other US tech companies. It was also cheaper to make, requiring fewer AI chips than the models of bigger players.
Big Tech’s insatiable energy requirements for data centers sent power stocks soaring in 2024 and into this year, with Goldman Sachs estimating power demand will grow 160% by 2030.
Last year, 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 help meet the company’s AI needs.
Constellation, Vistra, and GE Vernova all hit new records just last week after President Donald Trump announced a new $500 billion project — backed by SoftBank (SFTBY), Oracle (ORCL), and OpenAI.
Wall Street analysts pushed back against the market reaction on Monday.
«I don’t 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 fantastic, they really are and they’ve pulled a number of levers on efficiency, but what they’re doing is not miraculous either, or unknown to other top AI researchers or AI labs that are out there,» 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 will also likely impact AI chipmaker Nvidia (NVDA). It’s estimated more than 40% of Nvidia’s revenue comes from Microsoft, Meta, Alphabet (GOOG, GOOGL), and Amazon (AMZN), according to Bloomberg data.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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