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Market Analysis
Energy Stocks Hit Hard as DeepSeek Shows AI Energy Demand Can Slow
The rapid rise of Chinese AI startup DeepSeek in the US App Store has also caused a selloff in energy stocks.
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The recent surge of Chinese AI startup DeepSeek to the top of Apple’s App Store in the US has sent ripples through the tech industry, challenging the dominance of established players like ChatGPT. This shift has prompted a reexamination of the sector’s landscape, impacting the stock prices of major tech companies and also power providers.
DeepSeek Changes AI Landscape
DeepSeek’s ascension has triggered a notable downturn in the stock market, affecting prominent tech companies such as Nvidia (NASDAQ: NVDA), Oracle (NASDAQ: ORCL), Microsoft (NASDAQ: MSFT), and Meta (NASDAQ: META).
This development underscores the market’s sensitivity to shifts in the tech hierarchy, as investors reassess the competitive environment and the value of established AI technologies. The unexpected rise of a Chinese startup has also reignited discussions about the effectiveness of US export controls on advanced AI technologies, further contributing to market volatility.
The introduction of DeepSeek’s efficient AI model has not only impacted tech stocks but also led to a sharp decline in the stock prices of power companies like Constellation Energy (NYSE: CEG) and Vistra Corp (NYSE: VST).
Investors are now likely reevaluating the energy requirements of AI applications, casting doubt on the previously anticipated demand for electricity from AI data centers. This reassessment has significant implications for investments in nuclear and carbon-free energy sources, as the market adjusts to the possibility of reduced energy consumption by AI technologies.
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Energy Stocks Hit
VST opened at $154.09 on January 27, 2025, but fell to a current price of $146.36 by 10:27 EST, with a day low of $144.23. This marks a steep decline from its previous close of $191.11.
Similarly, GEV’s stock opened at $339.60 and rose slightly to $345.685, yet it remains far below its previous close of $420.49. Meanwhile, CEG’s stock opened at $290.93 and continued its downward trajectory, reaching $277.44, compared to its earlier close of $347.44.
Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
