DeepSeek could put 'cold water' on utilities sector growth
Tech stocks began rebounding on Tuesday from a sell-off on Monday, fueled by the emergence of Chinese start-up DeepSeek's artificial intelligence (AI) model. The model raised questions about US companies' ability to compete, sending AI plays lower, including the utilities sector (XLU), which has thus far struggled to recover since the sell-off. Mizuho Americas managing director and senior analyst covering utilities Anthony Crowdell joins Market Domination with Julie Hyman and Josh Lipton to discuss his current read of the utilities sector. Before the sell-off, the utilities sector was gaining at an unprecedented level from increased demand due to AI tech's power-intensive needs. "When utilities typically do well, we do well because of fear and people looking for a safe haven," Crowdell explains. "This is a new [theme] for all of us in utility land, where we're excited about load growth, we're excited about the data center story, excited about earnings growth." The analyst explains that high valuations are part of the current problem with the utilities sector. "Maybe we were a little over our skis, especially on some of the [independent power producers] IPP valuations." He adds, "This is what happens when tourists invade a value space, and they just push these stocks up to huge valuations." Crowdell adds, "[The DeepSeek story] could put some cold water on the data center buildout, and it's clearly going to impact utilities' growth plans." To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Naomi Buchanan.