Nuclear energy stocks have recently been under significant pressure following the launch of DeepSeek’s new energy-efficient artificial intelligence model. This development has created ripples across the market, attributing declines not only to nuclear companies but also to semiconductor stocks globally.
Leading the pack of affected companies is Oklo Inc (NYSE:OKLO), which saw its shares plummet by 16.3% during pre-market trading. Similarly, NuScale Power Corporation (NYSE:SMR) experienced a 13.7% drop. These declines come on the heels of impressive gains over the past year, as these stocks had previously surged by 271% and over 800%, respectively. Their remarkable performance had primarily stemmed from investments by tech giants such as Google, Amazon, Microsoft, and Meta, who sought to utilize nuclear energy for powering their AI data centers.
The concerning news for investors arose when DeepSeek’s AI, which was positioned as requiring significantly less data and energy for operation, was officially launched. DeepSeek, based out of Hangzhou, China, introduced its large language model (LLM) named R1 on January 25, 2025. This AI was noted to match capabilities of existing models such as OpenAI’s at just one-tenth of the cost. Reports indicate the training expenses for DeepSeek’s model were estimated at less than $6 million, showcasing its newfound efficiency.
Mustafa Okur, an analyst from Bloomberg Intelligence, highlighted the broader market response, stating, “The steep declines reflect fears of lower demand after China’s frontier large language model (LLM), DeepSeek, was trained using a fraction of the GPUs compared to US LLMs.” The sentiment reflects worries not only about immediate profit margins for companies involved but also links to the diminishing perspective of nuclear energy’s role as AI models become cheaper to run.
The declines were not isolated to these nuclear companies. The energy sector saw shared pain among chipmakers and other semiconductor companies. Such reactions have pointed to synchronous distress across tech markets. The U.S. markets mirrored this trend, culminating in substantial losses for major players: Nvidia (NASDAQ:NVDA) recorded a 12% drop, echoing sentiments throughout the Nasdaq and S&P 500. The broader market responded accordingly, with Nasdaq futures falling over 3.5% and S&P 500 futures tumbling more than 2%.
Just as the nuclear sector adapted to newfound popularity spurred by data center dependencies, the market is facing what some experts expect could be the recalibration of expectations. The immediate losses highlight the inherent vulnerability of energy stocks tied to the fortunes of technological advancements, particularly those surrounding AI.
Some analysts, taking a more optimistic standpoint, note the potential for growth over the long term. If DeepSeek’s efficiency claims hold water, there’s speculation about how this could expedite industry access to AI technologies, potentially increasing demand for AI-related products and applications. This perspective could eventually lead to renewed interest and investments within the energy sector, should nuclear energy again align with future technological demands.
Historically, nuclear energy companies have witnessed volatile market behaviors tied closely to advancements or setbacks within the AI and tech spaces. The last year’s skyrocketing values were fueled by optimism surrounding clean energy commitments versus AI infrastructure needs. Now, with the sharp sell-offs, investors are left recalibrated and pondering the sustainability of this optimism.
While the immediate future seems grim for many nuclear energy stocks impacted by DeepSeek, the ever-evolving relationship between AI and energy markets calls for vigilance among investors. The nuances of DeepSeek and its less power-hungry AI model will demand attention as their impacts continue to ripple through the market and investor psyche.
This technologic renaissance continues to steer the narrative around nuclear energy within broader discussions of energy solutions for data-intensive applications. With each development, whether promising or perilous, the intertwining of nuclear energy and AI surely remains one of the more captivating tales weaving through the financial landscapes.
Only time will tell how these dynamics will reshape expectations and performance across energy sectors reliant on tech advancements, marking another chapter in the ever-complex relationship between technological innovation and market economics.