Editor’s Note: Last week, I toured the battleship USS North Carolina with my family. It was a humbling experience that reminded me of the painful realities of war.

It also reminded me of the importance of having a reliable source of power when you need it most. As the retired navy Admiral leading our tour noted, “when the boilers on these ships go down, they are sitting ducks.”

That’s why our navy built a fleet of nuclear-powered submarines that are the envy of the world. And soon, nuclear powered data centers may be the next fleet of warships in the global contest for AI supremacy.

Nuclear Power Play

If you don’t believe that data centers running artificial intelligence applications consume a lot of energy, consider the recent stock market behavior of public utility Constellation Energy (NSDQ: CEG). A month ago, I wrote about Constellation’s rapid rise after it announced that it was awarded a $1 billion contract by the U.S. General Services Administration (GSA).

The contract requires Constellation Energy to supply power to more than a dozen government agencies. According to the company, “This historic procurement locks in a cost-competitive, reliable supply of nuclear energy over a 10-year period, accelerating progress toward a carbon-free energy future while protecting taxpayers against future price hikes.”

As a result of that development, CEG jumped more than 10 percent in just a few days. I noted then, “After surging from below $224 to above $254 in the days following the announcement, it is lower than it was six months ago when it hit an all-time high near $289.”

The Sky is Falling

That is no longer the case. Since then, CEG soared higher to reach an all-time high of $352 on January 23. At that point, the sky appeared to be the limit for Constellation Energy.

The next day, the sky fell. That’s when Chinese company DeepSeek announced a new AI product that is substantially less expensive to build and use than the product offered by industry giant NVIDIA (NSDQ: NVDA).

That day, NVIDIA plunged 17 percent as the valuation models used on Wall Street digested that news (boxed area in chart above). At the same time, CEG fell nearly 20 percent.

If the claims made by DeepSeek about its AI product prove true, then NVIDIA’s profit margins will be narrowing as it lowers its prices to compete with DeepSeek.

Seeing Stars

But it wasn’t just NVIDIA and other AI providers that felt the pinch of DeepSeek’s shocking announcement. On the last day of January, Constellation Energy closed below $300 to completely give back all its gains over the previous three weeks.

If what DeepSeek says is true, then (1) AI products will become much cheaper to acquire, and (2) those same AI products will consume considerably less energy than NVIDIA’s products. And just like that, the assumptions made by those Wall Street algorithms regarding sales revenue and profit margins went up in smoke.

That does not mean that the AI sector is dead. Far from it. To be sure, demand for AI products will continue to grow at a rapid pace for years to come. And perhaps because of this development, demand will grow at an accelerating pace as prices go down.

Haven’t Got a Clue

I am excited about the near-term prospects for nuclear energy in this country. Under Trump, renewable energy is not going to get nearly as much support from the federal government as it did under Biden. That shortfall could be satisfied with nuclear energy, which is considered clean (does not emit pollutants) but is not renewable.

I am equally excited by the investment opportunities this process will create. If a couple of established players like NVIDIA and Constellation Energy can change in value so much based on the perceived implications of a single news release, then imagine what the actual impact could be on much smaller companies.

The trick is in figuring out exactly who those smaller companies are now, before they start appreciating rapidly. As evinced by the extreme volatility in NVIDIA and Constellation Energy during the past couple of weeks, Wall Street has no clue who they are yet, either.