DeepSeek Jeopardizes Bull Case for Electricity Generation Names, Speculative Energy Picks
American tech giants swore that it would take billions to build the infrastructure to stay ahead in the AI race — but then a Chinese newcomer called DeepSeek announced that it had trained its open-source reasoning model with less money and less sophisticated hardware. In response, shares of tech and semiconductor goliaths fell — and electricity generation names, which benefited from America’s AI salesmanship, plunged too.
- Until recently, AI spending was expected to lead to an electricity bull market, which would necessitate the use of new energy technology like nuclear and fusion.
- However, as investors weighed DeepSeek’s impact, beneficiaries such as Vistra, GE Vernova, and Constellation Energy fell 20%+.
What happens to the electricity bulls now? While many of DeepSeek’s claims are difficult to independently confirm, its cheaper prices are not in dispute. BloombergNEF founder Michael Liebreich calls DeepSeek’s efficiency improvements a “wake-up call” that could prompt the industry to “reexamine all [its] assumptions.” And as AI competitors like OpenAI look to replicate those improvements, speculative energy companies that have grown comfortable with the market’s assumptions might see their valuations jeopardized.
