The emergence of DeepSeek, a Chinese AI startup, has sent ripples through the US stock market, particularly impacting nuclear energy stocks that had positioned themselves as key players in powering the AI boom. This article analyzes the market reaction to DeepSeek and its potential implications for the nuclear energy sector and the broader AI landscape.
DeepSeek’s disruptive technology, reportedly more cost-effective and less energy-intensive than existing US AI models, has sparked concerns about a shift in AI dominance. This anxiety triggered a significant sell-off on Monday, with major nuclear energy stocks experiencing substantial declines. Companies like Nuscale Power Corp, a leading performer in 2024, saw its shares drop by as much as 24%. Other prominent players, including Vistra Corp, Talen Energy Corp, and Constellation Energy Corporation, also faced declines exceeding 20%.
Nuclear power plant cooling towers emitting steam.
The sell-off reflects a reassessment of the previously held narrative that US companies would dominate the AI landscape and, consequently, drive increased demand for nuclear energy to power the necessary infrastructure. The energy-intensive nature of current AI models had positioned nuclear power as a prime beneficiary of this trend. However, DeepSeek’s less energy-demanding technology challenges this assumption.
Oklo, a recently public nuclear energy technology company, experienced a particularly sharp decline, with its shares falling approximately 30%. Even established players like BWX Technologies and Cameco Corp, involved in nuclear energy parts and supply, were not immune to the market downturn, experiencing drops of around 10% and 9%, respectively.
A technician works on a server rack in a data center.
This sudden shift in market sentiment underscores the interconnectedness of the energy and technology sectors in the age of AI. The promise of AI had fueled significant investments in nuclear energy, driven by projections of soaring energy demands from data centers and other supporting infrastructure. The emergence of DeepSeek introduces a new variable into this equation, potentially altering the long-term energy requirements of the AI industry.
As Jay Woods, chief global strategist at Freedom Capital Markets, noted, DeepSeek’s potential to disrupt the AI market has become a central concern for investors. The combination of lower energy consumption and cost-effectiveness poses a significant challenge to established US AI models and the companies relying on their energy demands.
This recent market reaction starkly contrasts with the optimism observed just last week when nuclear power stocks surged following President Trump’s announcement of a $500 billion infrastructure project, “Stargate.” This initiative was seen as further validation of the AI boom and its potential to drive demand for nuclear energy.
President Donald Trump speaks at a rally.
The significant gains experienced by nuclear energy stocks in 2024, with companies like Nuscale Power, Vistra Corp, and Talen Energy seeing triple-digit percentage increases, are now being challenged by DeepSeek’s entrance into the market. The long-term impact on the nuclear energy sector and its role in powering the AI revolution remains to be seen. However, DeepSeek’s emergence serves as a crucial reminder of the dynamic and rapidly evolving nature of both the AI and energy markets.
In conclusion, DeepSeek’s arrival has introduced uncertainty into the market and triggered a significant reassessment of the relationship between AI and nuclear energy. The long-term implications for both sectors will depend on how DeepSeek’s technology evolves and its broader impact on the AI landscape. The market’s reaction underscores the importance of closely monitoring technological advancements and their potential to disrupt established industries and investment strategies.
