AI-Powered Power Stocks Tumble Amid DeepSeek Concerns
AI-dependent power stocks plummeted on Monday, mirroring the tech sector's sell-off. Chinese startup DeepSeek's AI advancements have raised questions about AI spending levels and market dominance of US companies.
Constellation Energy (CEG), the leading US nuclear operator, plunged by 21%, while Vistra Corp (VST) succumbed to a historic 28% drop. GE Vernova (GEV), a power equipment provider, declined by 21%. Even nuclear newcomer Oklo (OKLO) plummeted by 25%.
DeepSeek unveiled a competitive AI model on January 20th, comparable to chatbots from OpenAI and other US tech giants. Crucially, it required fewer AI chips, reducing production costs.
Despite rising power demand driven by Big Tech's data center needs, analysts expressed caution in light of DeepSeek's emergence. Stacy Rasgon of Bernstein believes DeepSeek's model is impressive but not groundbreaking, and other top AI researchers are aware of similar strategies.
Upcoming earnings reports from major AI data center spenders like Microsoft and Meta could provide further clarity on the market's direction. These outlooks will also impact Nvidia, a chipmaker heavily dependent on revenue from these tech giants.