AI-Driven Sell-Off Impacts Power Stocks
Constellation Energy (CEG), Vistra Corp (VST), and GE Vernova (GEV) experienced significant declines on Monday due to concerns raised by Chinese AI startup DeepSeek's advances in AI.
DeepSeek's cost-competitive AI model, requiring fewer AI chips, questioned the spending levels and market dominance of US tech companies in AI.
Constellation Energy's 19% drop, Vistra Corp's 29% intraday plunge, and GE Vernova's 21% decline reflect the impact of AI advancements on the power sector.
Analysts downplay the severity of the market reaction, emphasizing that DeepSeek's models are not miraculous and other AI researchers are aware of their approaches.
Earnings reports from AI data center infrastructure spenders Microsoft (MSFT) and Meta (META) this week are expected to provide clarity on the sector's outlook.
Over 40% of Nvidia's (NVDA) revenue is estimated to come from Microsoft, Meta, Alphabet, and Amazon, highlighting the potential impact of AI spending on the chipmaker's revenue.