• Nuclear energy stocks were hit Monday by investors' fears related to the new DeepSeek AI tool.

• The Chinese startup is fueling concerns that US AI dominance is slipping.

• Nuclear energy firms had been positioning themselves as suppliers for power-hungry AI data centers.

Concerns about the AI startup DeepSeek are battering a corner of the energy market that's been vying to be the power source of choice for the booming artificial intelligence industry in the US.

Nuclear power stocks were caught in Monday's steep sell-off, tumbling even further than many of the top tech names that plunged amid fears that China's DeepSeek app could challenge the narrative that helped prop up markets for years.

Nuscale Power Corp, one of the market's best-performing nuclear energy stocks in 2024, dropped as much as 27.5%. Vistra Corp, another nuclear power provider, dropped as much as 28%, while Constellation Energy Corporation dropped 21%.

Shares of Oklo, a nuclear energy technology company that went public last year, were down about 26%.

BWX Technologies, which supplies nuclear energy parts and clean power to the government, dropped as much as 13%. Cameco Corp, another nuclear energy provider, was also lower by 15%.

Nuclear power companies were among the beneficiaries of the AI boom in the past year amid soaring energy demands by data centers and other key infrastructure powering the technology.

But the debut of a cheaper, less energy-intensive AI model is damaging that view, as well as complicating the market's thinking on lofty stock valuations and heavy AI spending broadly.

"DeepSeek is all anyone is talking about as we kick off this busy trading week," Jay Woods, the chief global strategist at Freedom Capital Markets, wrote in a note on Monday. "The fact that this technology is supposed to take less energy and is more cost-effective than US-based models has US technology investors very concerned."

The move lower was a sharp reversal for the sector compared to last week, when nuclear power stocks rose on the fresh promise of an AI boom after President Donald Trump announced a $500 billion infrastructure project dubbed "Stargate."

The sell-off Monday also eats into last year's considerable gains in the space, as investors positioned for nuclear energy stocks to soar alongside tech. Nuscale Power gained 493% in 2024, Vistra Corp soared 262%, and Talen Energy climbed around 212%.