AI's Impact on Power Stocks: DeepSeek's Advance Raises Concerns
Key Points:
* AI-related power stocks plummeted as Chinese startup DeepSeek challenged US dominance in AI spending.
* Constellation Energy (CEG) dropped 21%, Vistra Corp (VST) plunged 28%, GE Vernova (GEV) fell 21%, and Oklo (OKLO) declined 25%.
* DeepSeek's competitive AI model and lower production costs raised questions about the viability of US companies' AI investments.
Big Tech's Energy Dependence:
* Rapid advances in AI have fueled demand for data centers, driving up power consumption.
* In 2024, Goldman Sachs predicted a 160% increase in power demand by 2030.
* Companies like Microsoft (META) and social media giant Meta (META) have announced major investments in nuclear energy to support their AI initiatives.
Market Reaction and Analyst Outlook:
* Wall Street analysts initially reacted with caution, downplaying DeepSeek's threat to AI infrastructure.
* Bernstein analyst Stacy Rasgon emphasized that DeepSeek's advancements, while impressive, were not groundbreaking.
* Expected earnings reports from Microsoft and Meta this week will shed light on the future of AI spending and its impact on power stocks.