Constellation Energy Corp (CEG) experienced a significant pre-market plunge of 5.88% on Monday morning, as part of a broader selloff in energy and chip stocks.
The selloff was triggered by concerns over the rapid progress made by Chinese AI startup DeepSeek, which announced a powerful AI model that was developed at a fraction of the typical cost. DeepSeek's achievement raised doubts about the validity of sky-high valuations for companies like Nvidia, which has been a key beneficiary of the AI stock boom due to the demand for its expensive chips and gear.
Analysts warned that DeepSeek's cost-effective AI model could potentially undermine the investment case for the entire AI supply chain, including demand for chips and equipment used in AI applications across various sectors like energy and nuclear. As a result, small-cap energy firms such as Nano Nuclear Energy and NuScale Power were among the hardest hit, plunging over 10% and 7.8% respectively, while the semiconductor sector represented by the SOXL ETF plummeted 8%.
