DeepSeek breakthrough raises AI energy questions

Travis Miller (racing driver)strategist

R1 illustrates the threat that computing efficiency gains pose to power generators,

wrote Travis Miller, a strategist covering energy and utilities for financial services firm Morningstar

We still believe data centers, reshoring, and the electrification theme will remain a tailwind,

he added

Satya Nadellamicrosoft CEO

Jevons paradox strikes again!"

Microsoft CEO Satya Nadella wrote on X on Monday

As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can't get enough of,

he added

What we're telling people is the fundamentals are still very healthy,

Pourreza told CNBC

Electrical grids in Europe and the US remain under-invested and one of the critical bottlenecks in terms of meeting load growth requirements,

Bank of America analysts told clients Monday

I think it's closer to the Japanese cars in the 60s."

A follower replied

Marc Andreesseninvestor

DeepSeek R1 is AI's Sputnik moment,

Marc Andreessen, one of Silicon Valley's best-known venture capitalists, quipped on X on Sunday, referring to the 1957 launch of the first Soviet satellite

It was an over-optimism of market demand and underappreciation of the ability to do more with less,

Gimon said

You don't want to be carried away by the fervor of the moment,

Gimon said

When I say exponential, I truly mean multiple orders of magnitude: more use cases and more demand, because now, all of a sudden, it's going to be much more accessible,

Su said

If the US wants to be a leader in AI going forward, we need to make sure we'll be able to power all those data centers,

said Benton Arnett, senior director for policy and markets at the Nuclear Energy Institute trade group

The market generally likes to do knee-jerk reactions,

said Susan Su, clean energy investor and partner at Toba Capital

It felt like the beginnings of a tulip craze,

said Eric Gimon, a senior fellow at clean energy think tank Energy Innovation, who pointed out that efficiency increased amid previous surges in data center construction, blunting energy growth

Nobody knows if the chips are really more efficient. But it seems like there's a lot of concern,

she said

We should have done this 10 months ago after an epic run for AMD,

he said, noting shares were at one point up more than 40% during the first quarter of 2024.

Building data centres requires lots of carbon in the production of steel and also lots of carbon-intensive mining and production processes for creating the computing hardware to fill them,

said Andrew Lensen, senior lecturer in artificial intelligence at Victoria University of Wellington

In our view, DeepSeek most likely drives further demand for data centers globally with advanced computational capabilities, high capacity storage, robust networking, energy efficient designs and infrastructure,

analysts at Citi said in a note

In this instance, if DeepSeek turns out to be what everybody wants, and they sell to U.S. companies, and the U.S. companies change their algorithms to adopt to it, it just means a greater, faster broader development,

Hirs said

If proven true, the efficiencies used within DeepSeek's open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand,

analysts with Evercore ISI said in a note