Why SMR Is Diving Today

NuScale Power (SMR) is sinking 22% today after Chinese start-up DeepSeek reportedly unveiled an AI model that was produced using old chips and much less computing power but is at least as proficient as the AI offerings of OpenAI and Meta (META). SMR is developing small modular nuclear reactors.

An aerial view of a nuclear plant, its domes casting a unique shadow.

Why DeepSeek’s News Is Pulling Down SMR

The Chinese tech firm reportedly used about 50,000 of Nvidia’s (NVDA) H100 chips, unveiled back in 2022, to develop its AI model. This development is leading to speculation that fewer of Nvidia’s new, power-hungry chips will be utilized to create AI in the future. And since nuclear energy was seen as a key means of powering both chip production and data centers that use the semiconductors, the Street is worried that there will be much less demand than previously thought for nuclear power over the long term.

Citi Questions the Beairsh Narrative

In a note to investors, Citi suggested that DeepSeek likely did utilize some highly advanced GPU chips to create its model. What’s more, the bank believes that American firms’ access to advanced AI chips is a significant asset, and it does not expect U.S. tech giants to abandon these chips.

The Recent Price Action of SMR Stock

In the last month, the shares are up 19%, but they are down 1.5% in the last three months.

While we acknowledge the potential of SMR, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey