AI Advancements Trigger Sell-Off in Power Stocks
Summary:
Artificial intelligence (AI) advancements by Chinese startup DeepSeek have raised concerns about AI spending levels and market dominance in the US. As a result, AI-exposed power stocks experienced a significant sell-off on Monday.
Key Details:
* Constellation Energy (CEG) plunged 21%, while Vistra Corp (VST) sank 28%.
* GE Vernova (GEV) and Oklo (OKLO) also declined sharply.
* DeepSeek's AI model, released on January 20th, competes with models from OpenAI and other US tech companies.
* Power demand for AI data centers has driven up power stock prices in recent years, but DeepSeek's lower-cost model has raised questions about spending levels.
* Wall Street analysts are downplaying the impact of DeepSeek, noting that its advancements are not revolutionary.
* Earnings reports from Microsoft and Meta later this week could provide more clarity on AI spending.
Implications for Investors:
* Investors should monitor the earnings reports of Microsoft, Meta, and other AI infrastructure providers for insights into AI spending trends.
* The rise of AI and the potential for cost-effective models could impact the market for power stocks and AI chips.