AI-Fueled Sell-Off Hits Power Stocks Amid Concerns over Chinese Competition
US power stocks plummeted on Monday following advancements in AI by Chinese startup DeepSeek, raising questions about AI spending levels at US companies and their market dominance.
Constellation Energy (CEG), the largest nuclear plant operator in the US, witnessed a record 19% decline, while electricity generator Vistra Corp (VST) sank 29% intraday. Power equipment maker GE Vernova (GEV) dropped 21%. Nuclear power startup Oklo (OKLO) also tanked by 21%.
DeepSeek's newly released AI model, unveiled on January 20, rivals chatbots from OpenAI and other US tech giants. It requires fewer AI chips, reducing production costs.
Big Tech's immense data center energy needs have driven power stock growth in recent years. Goldman Sachs predicts a 160% surge in power demand by 2030. Constellation recently announced a nuclear power partnership with Microsoft to revive a Pennsylvania plant. Meta issued an RFP for nuclear energy developers to support its AI operations.
However, Wall Street analysts contend that DeepSeek's breakthrough does not spell doom for AI infrastructure. Bernstein analyst Stacy Rasgon emphasizes that while DeepSeek's models are impressive, they are not unprecedented in the AI research community.
Investors await clarity from major AI data center infrastructure spenders Microsoft (MSFT) and Meta, who are due to report earnings this week. Their outlooks could impact AI chipmaker Nvidia (NVDA), which reportedly generates over 40% of its revenue from these companies.