GE Vernova (GEV) is sinking 22% today after Chinese start-up DeepSeek reportedly unveiled AI models that were produced using old chips and much less computing power than the AI offerings of OpenAI and Meta (META). However, DeepSeek’s models are at least as proficient as those of OpenAI and Meta, according to multiple reports.
GEV provides electrical equipment used by power plants and wind turbines.
Why DeepSeek’s News Is Pulling Down GEV
The Chinese tech firm reportedly used about 50,000 of Nvidia’s (NVDA) H100 chips, unveiled back in 2022, to develop its AI models. This news is leading to speculation that fewer of Nvidia’s latest, power-hungry chips will be utilized to create AI in the future, while U.S. data centers may not expand as rapidly as previously thought.
It was previously believed that electricity production had to climb a great deal to power both chip manufacturing and data centers. But given the doubts that have now arisen about the demand for chips and the proliferation of data centers going forward, the Street is worried that there will be much less need than previously expected for electricity over the long term. As a result, GEV is tumbling today.
While we acknowledge the potential of GEV, 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 GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ ALSO 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.
There are several possible reasons why GEV stock is dropping sharply today:
1. Poor earnings report: If General Electric (GEV) recently released a disappointing earnings report, investors may be selling off their shares in response to the company’s underperformance.
2. Economic downturn: If there is a broader economic downturn or market correction, GEV stock may be dropping along with other companies in the same industry or sector.
3. Negative news: If there is negative news surrounding GEV, such as a scandal, lawsuit, or regulatory investigation, investors may be selling off their shares in response to the uncertainty.
4. Analyst downgrades: If analysts have recently downgraded their ratings on GEV stock, this could be causing a drop in the stock price as investors follow their recommendations.
It is important to conduct further research and analysis to determine the specific reason for the drop in GEV stock and to make informed decisions about whether to buy, hold, or sell shares in the company.
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