By David Uberti

Some of the power stocks that have been unlikely beneficiaries of artificial-intelligence hype are suddenly tumbling.

Utilities are the S&P 500's second worst-performing sector Monday. The pullback came after innovations by Chinese upstart DeepSeek rattled investors betting on a surge in demand for energy-hungry chips and data centers.

Reports about DeepSeek's low-cost approach have "created panic among investors who question the sustainability of US data center and AI investments," Guggenheim analysts wrote in a note.

Independent power producers that sell electricity into wholesale markets are bearing the brunt of the pain.

Shares in Constellation Energy, a nuclear-power producer that has been one of the stock market's top performers over the past year, fell as much as 18%. Vistra plunged by more than 20%. NRG and Talen Energy also posted steep declines.

Many of the regulated U.S. utilities forecasting AI-linked power-demand growth in the coming years have escaped the selloff-for now.

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January 27, 2025 10:19 ET (15:19 GMT)

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