Investors are pulling back from the artificial intelligence trade. Previously, a report by the Lawrence Berkeley National Laboratory highlighted that US data centers are expected to use 6.7% to 12% of all power by 2028. However, one artificial intelligence startup has upended these estimates, leaving investors wondering whether the anticipated surge in power demand and data center expansion still holds.
Energy, infrastructure, and real-estate stocks were tanking on Monday, even though they were known to be less crowded alternatives to stocks such as Nvidia. Monday’s broad-market selloff has revealed how a vast number of energy-related companies have been banking on the AI boom and the anticipated power surge it was expected to bring.
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“The share price drop yesterday demonstrated that many energy infrastructure companies got carried away in the momentum of the AI story last year”.
-Talon Custer, an analyst for Bloomberg Intelligence.
DeepSeek, an artificial intelligence startup from China, caused a frenzy in the AI world after launching its latest AI models. The company claims that these models built are at par or better than industry-leading models in the United States. They require fewer chips and are made at a fraction of the cost. All of these updates are now threatening to upset the technology world. Once the best-performing securities over the past 18 months, US electricity providers are now one of the hardest hit sectors with investors reevaluating their outlooks toward artificial intelligence and the magnitude of money that they are spending.
While many analysts, such as those at Citigroup, assert that DeepSeek’s large-language model had “prompted investor inquiries around the cost of compute”. Yet many others such as Bernstein doubt that the DeepSeek model was actually built with the acclaimed $6 million figure. They deem that the market reaction on Monday was “overblown”. Nevertheless, investors are concerned that the wider adoption of models, such as those by DeepSeek, could result in lesser demand for electricity and also require a smaller power build-out.
“If proven true, the efficiencies used within DeepSeek’s open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand”.
-Analysts with Evercore ISI said in a note, as reported by Reuters.
DeepSeek AI is also threatening the dominance of current leaders in the artificial intelligence world. This could potentially slow down the deployment of their data centers. However, an energy economist at the University of Houston noted that the wider adoption of AI could be positive news. This is because this adoption would in turn result in a surge in power demand. This is why he views the power stocks sell-off as short-lived and short-sighted.
“In this instance, if DeepSeek turns out to be what everybody wants, and they sell to U.S. companies, and the U.S. companies change their algorithms to adopt to it, it just means a greater, faster broader development”.
– Ed Hirs, energy economist at the University of Houston.
For this article, we selected AI stocks by screening out the worst-performing stocks from Friday’s close (24th January) to Tuesday’s close (28th January). These stocks were then ranked in ascending order of their declines.
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29. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Share Price Decline: (3.62%)
Equinix, Inc. (NASDAQ:EQIX) is a pure-play data center provider. A leader in the data center real estate investment trust (REIT) sector, Equinix saw its stock plunging 7.07% on Monday amid concerns surrounding AI investment sustainability. DeepSeek’s AI models sparked unrest amongst investors who question whether the capital expenditures by major tech giants are justified. Such concerns have impacted notable data center stocks, pushing investors to re-evaluate whether the need for expansive data center infrastructure may diminish.
28. Johnson Controls International plc (NYSE:JCI)
Number of Hedge Fund Holders: 46
Share Price Decline: (6.73%)
Johnson Controls International plc (NYSE:JCI) provides technology solutions for buildings, energy products, integrated infrastructure, and next-generation transportation systems. On January 28, Melius Research downgraded Johnson Controls (JCI) to “Hold” from Buy with a respective price target of $95. Even though the firm isn’t concerned about the earnings results of the company, it is worried about the multiple that investors will be willing to apply to those results as the advent of DeepSeek increases the risk that the AI capex “arms race has peaked”.
27. Public Service Enterprise Group Incorporated (NYSE:PEG)
Number of Hedge Fund Holders: 31
Share Price Decline: (7.17%)
Public Service Enterprise Group Incorporated (NYSE:PEG) is a combination electric and gas utility holding company. Shares for the stock plunged on Monday after Barclays downgraded PSEG (PEG) to Equal Weight from Overweight with a price target of $84, down from $88. The firm deemed the company’s setup for fiscal 2025 to be “more complicated”. The stock plunge also coincides with the broader market reaction coming from DeepSeek’s emergence, leading investors to reassess electricity demand from AI-driven data centers.
26. The Williams Companies, Inc. (NYSE:WMB)
Number of Hedge Fund Investors: 37
Share Price Decline: (7.35%)
The Williams Companies, Inc. (NYSE:WMB) is an American energy company engaged in natural gas processing and transportation. Pipeline stocks such as WMB have plunged following Monday’s broad market reaction to DeepSeek. These stocks were previously riding high on the anticipation that AI adoption would fuel power demand. According to UBS analysts, WMB is among the handful of stocks with the most upside once the DeepSeek news settles in. They contend that DeepSeek may require less power and may be cheap, but that could imply it ends up encouraging faster adoption of AI and spur additional power demand.
“Any increase in efficiency will likely drive down AI product prices and increase adoption of AI”
-UBS analyst Manav Gupta in a note Monday.
25. Trane Technologies plc (NYSE:TT)
Number of Hedge Fund Holders: 62
Share Price Decline: (8.82%)
Trane Technologies plc (NYSE:TT) manufactures industrial equipment. The heating, ventilation, and air-conditioning company’s stock plunged more than 8% after news of a cheaper, open-source AI model from DeepSeek spread. Stocks such as Trane who are heavily tied to the AI market experienced losses amid concerns that the expected surge in electricity demand stemming from AI data centers may not materialize.
24. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 42
Share Price Decline: (9.25%)
Kinder Morgan, Inc. (NYSE:KMI) is a pipeline transportation and energy infrastructure company. Shares of the stock plunged 9.25% from Friday’s close to Tuesday’s close, extending its losses over multiple sessions. CFRA analyst Stewart Glickman, mentioning tickers like Kinder Morgan, had this to say about the emergence of DeepSeek.
“Nat gas-focused midstream names like KMI and WMB got spanked yesterday”.
According to the analyst, the market has shown a bit of an overreaction. He said that the news isn’t going to impact earnings for 2025 or 2026 because the AI data centers the pipelines are expected to power are still being built. Meanwhile, AI concerns aren’t going to change the demand for natural gas to make products like plastics and fertilizers.
23. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 52
Share Price Decline: (10.25%)
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust engaged in the provision of data center, colocation, and interconnection solutions. Concerning DeepSeek’s emergence, Mizuho has stated that the Chinese startup’s new artificial intelligence model is going to raise several questions for data center stakeholders, such as those surrounding the need for massive spending by hyperscalers and use cases for AI monetization. The firm said that there may be a “knee-jerk negative reaction” to data center stocks, particularly for Digital Realty. This is most probably going to be in response to fears of a likely rethink of big AI spending.
22. NRG Energy, Inc. (NYSE:NRG)
Number of Hedge Fund Holders: 49
Share Price Decline: (10.23%)
NRG Energy, Inc. (NYSE:NRG) operates as an energy and home services company in the United States and Canada. DeepSeek’s entry into the market has also impacted NRG Energy, whose stock has plunged more than 10%. Investors sold off shares of power utilities which previously hiked on hopes of a demand surge from power-hungry AI-driven data centers. Nevertheless, Morgan Stanley maintained a “Hold” on the stock on Monday, January 27, with a price target of $86.00.
21. Fluence Energy, Inc. (NASDAQ:FLNC)
Number of Hedge Fund Investors: 27
Share Price Decline: (10.85%)
Fluence Energy (NASDAQ:FLNC) is a global leader in energy storage technology, specializing in battery-based energy storage solutions. The stock’s plunge, similar to Energy Vault Holdings, coincides with the broader market reaction following the news of DeepSeek’s emergence. With investors reassessing the energy needs of AI data centers, broader market trends and industry-specific headwinds have led to the plunge.
20. BWX Technologies, Inc. (NYSE:BWXT)
Number of Hedge Fund Holders: 43
Share Price Decline: (12.22%)
BWX Technologies, Inc. (NYSE:BWXT) manufactures and sells nuclear components. Nuclear energy firms have been positioning themselves as a prominent source of energy for power-hungry AI data centers. Sadly, these power stocks were hit by the Monday market sell-off amid concerns that DeepSeek’s innovations are hitting the energy market which was previously competing to supply power to the AI industry. BWX Technologies, Inc. (NYSE:BWXT), which supplies clean power and nuclear energy parts to the government, dropped by more than 10%.
19. Denison Mines Corp. (NYSEAMERICAN:DNN)
Number of Hedge Fund Investors: 23
Share Price Decline: (12.32%)
Denison Mines Corp. (NYSEAMERICAN:DNN) is a leading uranium exploration and development company. DeepSeek’s entry into the market has had investors believe that Western artificial intelligence companies have been buying more AI chips than required. Consequently, there won’t be a need for huge amounts of power for these chips if the new AI setup is implemented. In response, some of the biggest uranium stocks faced a sell-off, including Denison Mines Corp.
18. Cameco Corporation (NYSE:CCJ)
Number of Hedge Fund Investors: 60
Share Price Decline: (13.25%)
Cameco Corporation (NYSE:CCJ) is one of the world’s largest uranium producers. The demand for nuclear energy to power AI data centers was anticipated to boost both uranium prices and stocks higher. However, after the news of a cheaper and open-source AI model from DeepSeek spread, shares of some of the biggest uranium mining stocks, including Cameco Corporation, were down instead. The stock tanked 13%.
17. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 90
Share Price Decline: (15.24%)
Eaton Corporation plc (NYSE:ETN) provides power management solutions specializing in electrical, industrial, and energy infrastructure. A host of US stocks plunged on Monday after the Chinese startup DeepSeek spooked investors with its DeepSeek AI models. These innovations imply that the world may not need as many data centers or as many chips as anticipated, and that the gigantic investments in AI may not be justified. Following the news, electrical infrastructure equipment provider Eaton fell an estimated 16%.
16. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
Share Price Decline: (15.55%)
GE Vernova Inc. (NYSE:GEV) is an energy equipment manufacturing firm. Share prices of the stock were down more than 15% in a share rout following the emergence of DeepSeek. Previously, GE Vernova’s Scott Strazik said that “gas has never had so much fun”, a large reason for which was the optimism surrounding the predicted data boom. Now that investors are worried that there is going to be less need for electricity over the long term, GEV has been tumbling like many other utility stocks. On January 28, TD Cowen raised the firm’s price target on GE Vernova (GEV) to $405 from $400 and kept a “Buy” rating on the shares. The firm noted that GEV’s Q4 commentary has been positive, but the arrival of DeepSeek’s AI model, with its lower electricity usage, has impacted power stocks as investors worry about the efficiency threat.
15. Energy Vault Holdings, Inc. (NYSE:NRGV)
Number of Hedge Fund Holders: 5
Share Price Decline: (16.51%)
Energy Vault Holdings, Inc. (NYSE:NRGV) is an energy storage company that aims to support sustainable energy and reduce costs. NRGV’s plunge also aligns with the broad-market reaction following the news of the emergence of DeepSeek, a Chinese startup that has shaken up Wall Street with its AI model requiring less chips and power. With Energy Vault specializing in energy storage solutions, the stock plunge could be due to the perceived decrease in future energy consumption.
14. Talen Energy Corporation (NASDAQ:TLN)
Number of Hedge Fund Investors: 68
Share Price Decline: (16.58%)
Talen Energy Corporation (NASDAQ:TLN) is a leading independent power producer and energy infrastructure company. Shares of Talen Energy dropped 16.58% following the news of DeepSeek. Investors are scared of a lower-cost business model that could slow down power demand growth of companies such as Talen Energy.
“If proven true, the efficiencies used within DeepSeek’s open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand”.
-Analysts with Evercore ISI said in a note.
13. EMCOR Group, Inc. (NYSE:EME)
Number of Hedge Fund Holders: 40
Share Price Decline: (17.63%)
EMCOR Group, Inc. (NYSE:EME) provides construction and facilities, building, and industrial services. The company builds and operates data centers, engaging in activities such as installing HVAC systems, power distribution, energy management, fire protection solutions, and other vital parts data centers require to function at a high level. The company also manages the data center once completed, ensuring it operates efficiently. The news surrounding AI models requiring less chips and power has had a massive impact on EMCOR Group as well. This is because investors are concerned that the demand for power and data centers for artificial intelligence may not be as high as initially anticipated.
12. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Share Price Decline: (17.53%)
Arista Networks, Inc. (NYSE:ANET) develops, markets, and sells cloud networking solutions. Another data center stock that plunged in the DeepSeek AI frenzy, Arista Networks fell considering many data centers buy ANET’s products, and the possibility of fewer data centers and power needs of AI models could reduce the demand for its networking products. Jefferies, in a note to investors, asserted that DeepSeek’s ability to develop AI models using old chips could pressure tech giants to spend less on AI moving forward.
11. Powell Industries, Inc. (NASDAQ:POWL)
Number of Hedge Fund Holders: 26
Share Price Decline: (18.06%)
Powell Industries, Inc. (NASDAQ:POWL) is an industrial products company that makes and sells electrical equipment. DeepSeek’s AI models impacted a lot of utilities, energy, and infrastructure stocks and led to a broad market sell-off. Reported to use older chips and less computing power, DeepSeek’s AI models have led to an increased speculation that artificial intelligence may not need as much chips or power as previously anticipated. As a result, Powell Industries also plunged as the demand for Powell’s supply equipment for data centers may not be as much as previously anticipated.
10. Oklo Inc. (NYSE:OKLO)
Number of Hedge Fund Holders: N/A
Share Price Decline: (18.55%)
AI-exposed power stock Oklo tanked more than 15% following the news of DeepSeek and its AI models. Oklo Inc. (NYSE:OKLO) develops advanced nuclear power plants that recycle nuclear waste to provide clean, reliable energy, supporting sustainable solutions for the increasing power demands of AI. Investors are concerned about advancements coming from startups such as DeepSeek that have the potential to reduce the anticipated surge in electricity demand from AI data centers. This has impacted companies such as Oklo which are developing advanced nuclear reactors to meet this demand.
9. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Share Price Decline: (19.75%)
Constellation Energy Group (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. One of the worst-performing stocks on the S&P 500 on Monday was Constellation Energy. Who knew that an open-source AI model from a Chinese startup could spread panic on Wall Street? Investors had previously bid up power stocks on the belief that US hyperscalers would invest money into data centers required for AI use. Naturally, it would have caused a surge in energy demand.
Here is what Paul Zimbardo, managing director for US power utilities and clean energy research at Jefferies, has to say:
“Hopefully we can kind of resume some of the upward [stock] trend, but this really does kind of cast some uncertainty into that thesis, which has become an investor’s base case”.
8. Stem, Inc. (NYSE:STEM)
Share Price Decline: (20.76%)
Stem, Inc. (NYSE:STEM) is a global leader in artificial intelligence (AI)-enabled clean energy software and services. The stock’s share price decline coincides with the broader market reaction to DeepSeek, a Chinese AI startup that has shaken up Wall Street with its AI models made with less chips and power. Innovations such as DeepSeek could imply a reduction in energy demand, impacting companies in the utilities sector.
7. TransAlta Corporation (NYSE:TAC)
Number of Hedge Fund Holders: 28
Share Price Decline: (21.22%)
TransAlta Corporation (NYSE:TAC) is an electricity power generation company that owns, operates and develops a diverse fleet of electrical generation assets. TransAlta stock declined following news of the emergence of DeepSeek, whose advanced capabilities with lower energy consumption and reduced reliance on high-end hardware have sparked a frenzy in the market. Investors have been concerned about potential disruptions in energy demand, particularly from AI-driven data centers. Consequently, utility stocks such as TransAlta, previously poised to benefit from rising electricity demand, faced a significant plunge.
6. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 97
Share Price Decline: (21.74%)
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. Before Vistra’s breakdown during Monday’s broad market sell-off, this AI data center stock was significantly rising due to the increasing electricity consumption of AI data centers. However, the DeepSeek frenzy has led Vistra investors to question whether AI will require huge amounts of computing power and electricity that was previously expected. The stock has plunged more than 20% after the arrival of DeepSeek.
5. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 39
Share Price Decline: (22.43%)
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and selling of semiconductor-based connectivity solutions for cloud and AI infrastructure. DeepSeek’s low-cost approach hurt stocks such as Astera Labs, which tanked more than 20% following the AI frenzy. However, Northland Securities isn’t concerned about DeepSeek’s AI models just yet. The firm has stated that it doesn’t expect big tech giants such as Meta, Google, Amazon, and Microsoft to cut their capital expenditure forecasts when they report their earnings. This could act as a catalyst for Astera Labs. The firm upgraded Astera Labs to “Outperform” from Market Perform with a $120 price target following the DeepSeek news.
“ALAB shares have declined 38% since our downgrade based on the valuation on 1/2/25. Most of that decline occurred yesterday.” They further stated that “We do not expect AMZN, GOOG, META, and MSFT to cut capex when they report earnings over the next few weeks, acting as a catalyst for the shares.”
4. Comfort Systems USA, Inc. (NYSE:FIX)
Number of Hedge Fund Holders: 35
Share Price Decline: (23.58%)
Comfort Systems USA, Inc. (NYSE:FIX) is a national heating, ventilation and cooling (HVAC) company. The stock, previously surging on AI-related construction demand, surged more than 20% following the news of DeepSeek. Now that AI companies may slow their expansion considering more efficient AI models won’t require building as many data centers as anticipated, and also because investment may be scaled back with AI systems requiring lesser compute and energy, the plunge in Comfort Systems USA isn’t entirely a shocker. A decline in electricity demand from AI driven data centers implies lesser demand for the company’s HVAC and engineering solutions.
3. NuScale Power Corporation (NYSE:SMR)
Number of Hedge Fund Holders: 18
Share Price Decline: (25.02%)
NuScale Power Corporation (NYSE:SMR) designs and markets small modular reactors (SMRs). Another stock heavily tied to the AI world, Corvallis-based NuScale has previously benefited from the idea that AI-driven electricity demand increases could boost its small modular reactor business. Now that Wall Street is reevaluating the energy requirements of AI, energy and related utilities stocks have been tanking. In particular, NuScale saw its shares plunge by 25% following the news regarding DeepSeek. Not only do DeepSeek’s AI models use less computing power and chips, but the model released is also open-source. This move has made it harder for competitors to justify the huge costs that they have been spending on hardware, software, and expertise needed to develop similar systems.
2. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Share Price Decline: (26.84%)
Vertiv Holdings Co (NYSE:VRT) offers digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities. A standout performer in 2024, the stock’s share price plummeted more than 25% following the news of DeepSeek. DeepSeek’s AI model, boasting less compute and power needs, has led investors to question the long-term viability of massive AI infrastructure investments. Not everyone, however, is worried. JP Morgan analyst said on January 28 that the pullback yesterday in shares of Vertiv Holdings (NYSE:VRT) looks largely overdone. The firm claimed that their models have always assumed growth in high-end artificial intelligence server shipments to slow beyond 2026, and that by 2029, spending on AI is expected to shift from 70% training and 30% inference to the opposite. The firm still believes that Vertiv will benefit from a longer term infrastructure cycle.
1. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 25
Share Price Decline: (31.6%)
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On January 27, BMO Capital noted that the DeepSeek model launched on January 10 used Nvidia (NVDA) H800 chips instead of the latest models with higher power intensity. It acknowledged that “there’s a lot we don’t know” about the Chinese AI model, but there are concerns about DeepSeek “heavily pressuring” power and electric infrastructure equities with influence on data center demand. This includes Market Perform-rated Bloom Energy (NYSE:BE), the analyst said. Even though the firm said it knows little about DeepSeek, the power intensity of servers could be 50%-75% less than the ones using Nvidia’s latest GPU platform.
While we acknowledge the potential of BE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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