After China’s DeepSeek artificial intelligence (AI) app rocked Wall Street on Monday, stocks are trying to cobble together a rebound this Tuesday. That includes nuclear energy stocks like Vistra (VST), Constellation Energy (CEG), Talen Energy (TLN), and Oklo (OKLO), which took heavy losses as investors downwardly revised their most bullish forecasts for AI data center growth.
The mood has improved overnight, with VST up 3.5% at last check, TLN rising 5%, and OKLO up 4.5%. CEG is a notable exception, down another 2.6% so far today.
More broadly, the VanEck Uranium & Nuclear Energy ETF (NLR) has edged up 0.2%, looking to recover from Monday’s 11% rout. NLR’s freefall yesterday stopped just short of testing its 200-day moving average, which contained the late-December lows.
But with forecasts for massive AI-fueled energy demand from Magnificent 7 hyperscalers like Amazon (AMZN), Microsoft (MSFT), and Meta Platforms (META) driving nuclear energy stocks significantly higher over the past year, is this week’s pullback a solid buying opportunity - or should investors proceed with caution on this hot energy subsector?
First, investors should note that the latest bout of volatility in nuclear energy stocks is nothing new. Nuclear energy is heavily regulated, and changes in government policies or regulations can significantly impact the industry. Any new regulations or changes in existing ones can lead to uncertainty and affect stock prices - as we saw last year, when an unfavorable FERC ruling for Talen triggered heavy losses across the group.
Plus, nuclear energy has often faced public scrutiny due to safety concerns, especially after high-profile incidents like the Fukushima disaster. Any news related to safety issues can also lead to increased volatility in stock prices.
And while the nuclear energy subsector is continuously evolving with new technologies, which can lead to growth opportunities, that also brings risks associated with the adoption and implementation of emerging tech.
Perhaps most pressing for Wall Street right now, expected demand for nuclear energy can fluctuate significantly. While projected AI demand is a hot topic this week, forecasts can also shift based on the overall energy market, competition from other energy sources (like renewables), and geopolitical factors.
As a result, nuclear energy stocks are best reserved for investors who can tolerate a higher degree of volatility. One way to help mitigate some of the risk associated with trying to pick winners in this emerging space is by opting for an ETF like NLR or Nuclear Renaissance Index ETF (NUKZ), which invests in a basket of related securities.
This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor had a position in: CEG , MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.