AI-Powered Energy Stocks Rebound Amidst Uncertainty

AI-Exposed Power Stocks Surge:

Following a recent decline due to concerns over a new AI model from DeepSeek, AI-related power stocks rebounded on Tuesday:

* Constellation Energy (CEG): +5.55%
* Vistra Corp (VST): +7.08%
* GE Vernova (GEV): +6.27%

Market Volatility:

DeepSeek's model sparked concerns among investors, who believed it could reduce energy demand driven by data center expansion. However, analysts remain guarded in their outlook:

* Paul Zimbardo, Jeffries: "This casts some uncertainty into the thesis that has become an investors' base case."
* Pavel Molchanov, Raymond James: "AI is a very nascent technology, making energy usage estimates speculative."

Long-Term Demand Outlook:

Despite the uncertainty, analysts anticipate continued electricity demand growth, driven by data center deployments and broader economic activity.

* US electricity consumption increased by 2% in 2024.
* The Energy Information Administration predicts similar growth rates in 2025 and 2026.

Industry Transformation:

Utility companies are simultaneously investing in electric grids and data center infrastructure. These investments are expected to support long-term power demand.

"It takes years to build data center projects and power plants," observes Molchanov. "This is a marathon, not a sprint."