After Diving on DeepSeek News, These 3 Nuclear Names Could Bounce Back
The new Chinese startup's effect on the energy sector has yet to be understood, so I'm eyeing these companies and their charts.
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Artificial intelligence-related stocks cratered on Monday as Chinese upstart DeepSeek threatened to upend the entire U.S. tech sector. I’m not buying or adding to any AI-related stocks until the dust settles, as indicated here.
But the selloff may have created opportunities outside of the tech sector. The energy sector is one of these areas.
The increased demand for energy due to the consumption of generative AI has been well-documented. Microsoft’s MSFT recent agreement with Constellation Energy Group to reopen the Three Mile Island nuclear plant speaks to the expected long-term impact of AI on the energy sector.
DeepSeek reportedly uses about one-third less energy than other AI systems. According to BMO analyst Subash Chandra, DeepSeek’s reported energy efficiency could put a damper on the demand for energy.
There is another school of thought that believes DeepSeek’s low cost could actually generate a surge in energy consumption. If the costs associated with AI-related projects fall dramatically, this could result in an increase in those types of projects, as well as greater usage of AI in general.
Right now, the market favors Mr. Chandra’s view. Nuclear-related energy stocks fell sharply this week, as the sector digested the ramifications of DeepSeek, and the technologies that are likely to follow it.
I’ve sifted through the charts of energy stocks that have been negatively affected by a potential decrease in demand. Here are three names that could see a rebound from the recent pullback in energy stocks:
Oklo Inc.
Shares of Oklo Inc. (OKLO) closed at an all-time high on Friday. Then, the California-based nuclear technology company suffered a 25% loss on Monday, as word of DeepSeek’s energy efficiencies began to spread.
Despite Monday's loss, Oklo is up an incredible 61.56% since the start of this year. The stock trades well above its key 50-day (blue) and 200-day (red) moving averages. Despite Monday’s debacle, its bullish trend remains intact.. GRADE: A-
Constellation Energy Group
Another name in the energy sector that was punished this week was Constellation Energy Group CEG. The Baltimore-based energy provider was rocked for a 21% loss on Monday, but is still up by 20.32% since the start of the year.
Like Oklo, Constellation Energy remains above its key moving averages, its bullish trend intact. Constellation’s selloff, however, occurred on heavier volume relative to the stock’s average turnover, perhaps a sign of profit-taking. Over the past 12 months, the stock has gained 141%. GRADE: B+
Nano Nuclear Energy
With a market capitalization of just $1.34 billion, Nano Nuclear Energy NNE is on a roll, gaining 52.7% so far this year. The stock closed at an all-time high on Friday, before falling 25% on Monday.
With an average range of over $5 per day, Nano Nuclear can be extremely volatile. Investors need to be aware of the potential for partial fills and wide spreads. When trading volatile small caps, investors should consider using limit orders to minimize slippage. GRADE: B
At the time of publication, Ponsi was long OKLO.
