On Monday, January 27, stocks of American electric, utility, and gas companies experienced one of the largest single-day declines on record. This drop was attributed to doubts about a surge in electricity demand and technology spending in the U.S., sparked by new AI technology introduced by Chinese startup DeepSeek. Also, the price of uranium, which could potentially fuel the AI revolution, fell by 5% on Monday evening.
DeepSeek’s AI chatbot has rapidly climbed to the top of the iPhone app download charts, surpassing ChatGPT, Threads, and Google. Reports indicate that leading AI companies utilize supercomputers with up to 16,000 integrated circuits for training their models, while DeepSeek operates with around 2,000 chips from Nvidia’s H800 series.
Analysts from Evercore ISI stated in a report: “If DeepSeek’s open-source model proves efficient, hyperscale data center developers could integrate it into their models, leading to more moderate energy demand.”
On the same day, technology stocks plummeted, with Nvidia shares dropping by 16%, TSMC by 11%, and Oracle by 15%. Media reports noted that following DeepSeek’s launch, the market capitalization of Wall Street stocks shrinked by $1.6 trillion. However, these three companies saw nearly a 3% rebound in their stock prices on Tuesday, January 28.
In conjunction with these developments, spot uranium prices also fell on Monday evening. Uranium is deemed crucial for developing energy-intensive AI as nuclear fuel. On Tuesday, the price of uranium oxide (U3O8) decreased by $3.90 per pound to $67.30 per pound, resulting in a weekly decline of $6.55 per pound.
George Heppel, an analyst from BMO Capital Markets, noted in a report: “Despite the negative shift in AI sentiment yesterday, we maintain our outlook on reactor demand through 2030, thanks to significant growth in reactor construction in China. Additionally, improvements in arbitrage trading economics should provide support at this level.”
The drop in uranium prices might have supported the stock prices of major uranium mining companies, which saw stock increases on Tuesday. Cameco (TSX: CCO) saw an increase of 1.2% to CAD 69.13 per share, Kazatomprom (LSE: KAP) rose by 1.6% to USD 37.60 per share, and NexGen Energy (TSX: NXE) gained 4.6% to CAD 9.15 per share.
