S&P 500 nuclear power giants Constellation Energy and Vistra were mixed early Tuesday after both plummeted Monday as China's private DeepSeek startup shook the markets. DeepSeek released a powerful artificial intelligence program that it claims cost just $5.6 million to build, marking a possible paradigm shift from the massive levels of investment by technology industry giants in energy and AI infrastructure.
Nuclear stocks swooned Monday during market action, marking a reverse of fortunes compared to last week. The sector had broadly gained ground after President Donald Trump announced last Tuesday that Sam Altman's OpenAI, SoftBank and Oracle are planning a joint venture called Stargate, to build data centers and other AI infrastructure in the U.S., with investments of up to $500 billion.
Data centers, needed to "train" AI learning models as well as allow those models to produce conclusions from new data, are expected to increase demand for electricity through the decade. Big Tech players have looked to nuclear power, as well as natural gas, to answer the demand surge. However, the concern with China's DeepSeek is that the massive amount of investment is not necessarily needed for a capable AI model.
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Morgan Stanley analyst Brian Nowak wrote on Tuesday that "it is likely that we will continue to see significant capex in the U.S." from stocks exposed to AI power infrastructure growth. Nowak added that the firm continues to expect "to see a large number of data center project announcements."
The analyst also wrote that the "cost of compute" for AI, which is the capital cost of a data center divided by the computational power of the data center, will fall by around 90% over the next 6 years. This will result in a "Jevon's Paradox" in which the rapidly falling cost of compute will lead to rapidly accelerating demand, according to Nowak.
Nuclear Stocks Down On The News
Constellation Energy fell 3.4% to 265.79 while Vistra advanced 1.4% to 139.20 on Tuesday. The two S&P 500 stocks sank 20.8% and 28.3%, respectively on Monday.
The nuclear giants, who were two of the top three S&P 500 performers in January going into Monday's trade, jumped more than 9% last week.
CEG and VST entered the week extended above traditional buy points but are now back below those entry points, according to MarketSurge chart analysis.
Along with Constellation Energy and Vistra, Talen Energy advanced 3.3% after dropping 21.6% on Monday. Talen Energy signed a $650 million deal last March with Amazon.com for a nuclear powered data center campus.
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Meanwhile, small modular reactor-focused companies signaled declines after huge gains last week. The industry segment so far offers no operational advanced nuclear projects. However, several companies are moving ahead with small modular reactor, or SMR, technology.
Oklo — the nuclear power startup backed by Sam Altman — edged up 0.8% early Tuesday after retreating 25.6% on Monday. The stock soared 60% last week, surging past a traditional 28.12 buy point, the high from Oct. 30, from a nine-week cup base. The stock began Monday up nearly 90% in January. However, the stock is volatile and has swung above and below that 28.12 entry in broad moves.
Fellow SMR-focused stock Nano Nuclear Energy gained about 6.8% Tuesday morning after dropping 25.3% on Monday. The stock booked an 80% advance last week. NuScale Power fell 1.4% Tuesday after dipping 27.5% Monday. That stock rallied 27% last week.
GE Vernova, which has been seeing demand for its natural gas turbines for data centers, declined 3.6% early Tuesday. GEV declined around 22% on Monday.
Meanwhile, Entergy, one of the largest U.S. utilities, dipped 1.4% on Tuesday. In December, Entergy was chosen by Meta Platforms to help power its planned $10 billion artificial intelligence data center in northeast Louisiana.
AI data center-adjacent stocks, including HVAC plays, also dropped on Monday. Powell Industries fell 16% while Modine Manufacturing declined 26%. Comfort Systems USA sank 25% and Vertiv Holdings fell around 30%.
Constellation Energy stock has an 89 Composite Rating out of a best-possible 99. The S&P 500 stock also has a 94 Relative Strength Rating and a 54 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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