Power stocks had been on an AI tear. Then came DeepSeek.

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Subscribe to enjoy similar stories. Chinese AI startup DeepSeek has laid bare one of the power sector’s greatest fears: The AI boom might not need nearly as much electricity as anticipated. DeepSeek, a generative-AI model trained using substantially less energy than its American competitors, routed tech and power company shares last week, eroding stock gains spurred by data center growth projections.

Now, the companies planning to power those data centers are grappling with the prospect that AI may become much more energy efficient, and fast. Executives and analysts say DeepSeek’s launch is unlikely to have a near-term effect on data center investment plans as tech companies lock down contracts with utilities and power producers for huge amounts of electricity. Longer term, however, they say such efficiency gains call into question the need for massive investments in new power plants built to run for decades.

“As a developer, I would say we’re trying to remain sufficiently disciplined so that if things like DeepSeek do change the trajectory of demand growth, you have the ability to calibrate your activity," said Paul Segal, chief executive of LS Power, which operates power plants and renewable energy projects across the country. The nation’s largest competitive power providers, including Constellation Energy and Vistra, have been among the biggest winners in the AI boom, with plans to expand their fleets of power plants and renewable energy projects. Last week, their shares took some of the steepest falls on concerns that those plans might not be as lucrative as anticipated.