- Constellation Energy, Vistra Corp., Talen Energy and GE Vernova tumbled in early trading as China’s DeepSeek AI lab debuted, scaring investors with a lower-cost business model.
- Constellation, Vistra and GE Vernova were leading the S&P 500 this year as investors speculated on AI’s power needs.
- Now, the arrival of DeepSeek is raising questions about how much power will actually be needed.
Power companies that are most exposed to the tech sector’s data center boom plunged early Monday, as the debut of China’s DeepSeek open source AI laboratory led investors to question how much energy artificial intelligence applications will actually consume.
Constellation Energy and Vistra Corp. tumbled more than 14% in premarket trading. GE Vernova slid nearly 16% trading while Talen Energy lost more than 8%.
Constellation, Vistra and GE Vernova have led the S&P 500 this year as investors speculated that AI data centers will boost demand for enormous amounts of electricity.
But DeepSeek has developed a model that it claims is cheaper and more efficient than U.S competitors, raising doubts about the vast sums of money the tech sector is pouring in to data centers.
The tech companies have anticipated needing so much electricity to supply data centers that they have increasingly looked to nuclear power as a source of reliable, carbon-free energy.
Constellation, for example, has signed a power agreement with Microsoft to restart the Three Mile Island nuclear plant outside Harrisburg, Pennsylvania. Talen is powering an Amazon data center with electricity from the nearby Susquehanna nuclear plant.
Vistra has not inked a data center deal yet, though investors see promise in its nuclear and natural gas assets. GE Vernova has soared this year as the market believes its gas and electric grid businesses will benefit from AI demand.
This is a developing story. Please check back for updates.
This post was originally published on CNBC Markets
