Energy stocks exposed to AI were swept up in the tech sector sell-off on Monday, as advances in AI by Chinese startup DeepSeek raised questions about corporate AI spending levels American companies and their market domination.
Energy of the constellations (CEG), the largest nuclear power plant operator in the United States, fell a record 19%, while power producer Vistra Corp (VST) sank an intraday record 29%. Manufacturer and repairer of electrical equipment GE Vernova (GEV) decreased by 21%. Even the nuclear start-up Oklo (OKLO) fell by 21%.
DeepSeek, a Chinese AI startup, released a new AI model January 20 which is consulted as competitive as OpenAI chatbots and other American technology companies. It was also cheaper to manufacture, requiring fewer AI chips than models from the bigger players.
Big Tech is insatiable energy needs for data centers we sent energy reserves fly away in 2024 and this year, with Goldman Sachs estimating electricity demand will increase by 160% by 2030.
Last year, Constellation announced a nuclear energy deal with software giant Microsoft to relaunch a unit in Three Mile Island, Pennsylvania. In December, social media giant Meta (META) published a request for proposals nuclear power developers to help meet the company’s AI needs.
Constellation, Vistra and GE Vernova all hit new records last week following President Donald Trump’s announcement. a new 500 billion dollar project — supported by SoftBank (SFTBY), Oracle(ORCL) and OpenAI.
Wall Street analysts objected to the market reaction on Monday.
“I don’t think DeepSeek is the end all be all for AI infrastructure,” Stacy Rasgon, Bernstein’s managing director and principal analyst, told Yahoo Finance on Monday.
“The models they [DeepSeek] built are fantastic, they really are and they have pulled a number of efficiency levers, but what they are doing is also not miraculous, nor unknown to other major AI researchers or AI labs that exist “, he added.
Analysts expect to get more clarity later this week when Microsoft (MSFT) and Meta, two major investors in AI data center infrastructure, are expected to report results.
Their prospects will also likely impact AI chipmaker Nvidia (NVDA). It is estimated more than 40% of Nvidia’s revenue comes from Microsoft, Meta, Alphabet (GOOG, GOOGLE) and Amazon (AMZN), according to Bloomberg data.
Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on @ines_ferre.
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