Shares in GE Vernova (GEV 3.58%), a gas power, wind turbine, and electrification technology company, were down almost 9% in the week ending Friday morning. The move follows the release of Chinese startup DeepSeek's latest artificial intelligence (AI) models.
Where GE Vernova comes in
DeepSeek claims that its AI models cost a fraction of U.S. models. If this is accurate and the models are of similar quality, it could challenge the investment thesis that beguiled the market in 2024.
NYSE: GEV
Key Data Points
The thesis is that demand for AI applications will increase the need for the power that runs data centers. It's one that the likes of the major cloud service providers, Amazon's Amazon Web Services, Alphabet's Google, and Microsoft's Azure, have embraced as they've signed deals to procure long-term power from the nuclear industry.
Meanwhile, data center infrastructure and technology stocks, such as Nvidia and Vertiv, soared in 2024. GE Vernova also soared as the market priced in greater demand for gas turbine equipment, services, and electrification equipment.
That thesis and the stocks discussed above took a hit this week with the DeepSeek news. The threat from DeepSeek led the market to downgrade some of the frothier expectations for data center and power demand growth in the U.S. and a sell-off in the stocks the market has bought to play the theme.
Image source: Getty Images.
A glass-half-full view
An alternate view is that DeepSeek's AI and others will help snowball the adoption of AI globally -- something that could be good news for everyone. Moreover, GE Vernova's global presence and position as one of three major players in the gas turbine market (it has 38% of the market under construction in Asia) alongside Siemens Energy and Mitsubishi Power give investors confidence that it will benefit whoever wins out in AI.
