AI-Exposed Power Stocks Plunge Amid DeepSeek Competition

Summary:

* Power stocks fell sharply on Monday due to concerns about AI spending and market dominance by US companies.
* Constellation Energy (CEG), Vistra Corp (VST), GE Vernova (GEV), and Oklo (OKLO) all experienced significant declines.
* Chinese startup DeepSeek released a competitive AI model, raising questions about the efficiency and cost-effectiveness of US tech companies.

Impact on Power Stocks:

* Big Tech's growing energy needs for data centers have boosted power stocks in recent years.
* Goldman Sachs predicts a 160% increase in power demand by 2030.
* Constellation recently announced a nuclear power deal with Microsoft.
* Meta (META) has also sought proposals from nuclear energy developers.

Analysts' Response:

* Wall Street analysts downplayed the market reaction, emphasizing that DeepSeek's advances are not revolutionary.
* Stacy Rasgon of Bernstein highlights the efficiency gains but notes that they are not entirely novel.
* Analysts expect clarity from earnings reports by Meta and Microsoft, which are major spenders on AI data center infrastructure.

Impact on AI Chipmakers:

* Nvidia, a prominent AI chipmaker, is estimated to generate over 40% of its revenue from Microsoft, Meta, and other tech giants.
* The outlook from these companies could impact Nvidia's performance.

Conclusion:

The release of DeepSeek's AI model has raised concerns about the future of AI spending and market dominance. While analysts remain cautious, the impact on power stocks and AI chipmakers is still evolving.