Constellation Energy Corp (CEG) shares plummeted 16.26% in pre-market trading on Monday, as part of a broader selloff in energy and chip stocks triggered by concerns over the rapid progress made by Chinese AI startup DeepSeek.

DeepSeek announced that it has developed a powerful AI model that can match the performance of leading AI models like ChatGPT, but at a fraction of the typical cost. This achievement raised doubts about the validity of sky-high valuations for companies in the AI supply chain, including chipmakers like Nvidia and energy companies expected to benefit from the increasing energy demand for AI data centers.

As a major nuclear power company, Constellation Energy Corp was impacted by the potential implications of DeepSeek's more energy-efficient AI model on the future demand for nuclear energy to power AI data centers. Analysts warned that if DeepSeek's claims are validated, it could undermine the investment case for the entire AI supply chain, including the demand for energy infrastructure and services provided by companies like Constellation Energy.