By Mackenzie Tatananni

Shares of Constellation Energy, Vertiv Holdings, GE Vernova, and Vistra plunged in premarket trading Monday after a Chinese artificial-intelligence start-up sent a jolt through the markets.

An AI chatbot developed by China's DeepSeek rose to the top of the Apple App Store on Monday, surpassing ChatGPT. The underlying V3 model is not just seen as a GPT-4 competitor, but one that requires less computing power.

Constellation Energy stock was the worst performer in the S&P 500 in the premarket session, falling nearly 13%. The company is the largest owner of nuclear power plants in the U.S., followed by Vistra, shares of which were down 6%.

Shares of Vertiv Holdings, the manufacturer of computer room air conditioning systems, plunged 16%, while turbine-maker GE Vernova fell 14%.

While the news triggered a broad selloff in tech stocks, with futures for the tech-heavy Nasdaq Composite falling 4%, the decline in energy and infrastructure stocks appeared to be directly linked.

The advent of DeepSeek's latest model has sparked uncertainty about the growth of AI's energy consumption. Nuclear has been tapped as an answer to data centers' appetite for power, causing Constellation Energy and Vistra to benefit.

The links to infrastructure companies are even clearer. Vertiv claims to offer cooling solutions that "solve the complex challenges arising from the AI revolution," while GE Vernova said its gas turbines provide "sustainable solutions for uninterrupted data center operations."

DeepSeek could be a sign of things to come. If more efficient models are possible, this means data centers won't need to consume as much power, spelling trouble for some of the biggest winners of the AI boom.

More than anything, it is a pressing reminder of competition in the market. U.S.-based companies aren't alone in this race.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 27, 2025 08:35 ET (13:35 GMT)

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