Vistra Stock Sell-Off: AI's Impact on Power Demand

Vistra Corp. (NYSE: VST), a leading nuclear power provider, experienced a significant sell-off in February 2025, with its stock price tumbling nearly 30% in a single day. This dramatic decline can be attributed to two primary factors related to artificial intelligence (AI) demand and supply dynamics.



1. DeepSeek's Efficient AI Model: The release of DeepSeek's open-source AI model, which performs nearly as well as models from American leaders like OpenAI and Google at a fraction of the cost, raised concerns among Vistra investors. This model's efficiency could potentially reduce the need for massive computing power and electricity, which is a significant driver of demand for nuclear power providers like Vistra. The success of DeepSeek's model has led investors to question whether AI will require the huge amounts of computing power and electricity once expected, leading to a sell-off in Vistra's stock.
2. Excessive Valuations and Stretched Momentum: Vistra's stock had been on a significant upward trend, more than tripling in value in 2024. This rapid increase in valuation, combined with the concerns about AI demand, led to a sell-off as investors reassessed the company's prospects. The stock registered its highest daily trading volume since early May, indicating selling conviction by larger market players, such as institutional investors and hedge funds.

The measuring principle, which calculates the percentage change between the rising wedge's two trendlines and adds it to the pattern's upper trendline value, projects a bullish target of $480 for Vistra. If the stock resumes its longer-term uptrend and breaks above the rising wedge pattern, investors who use technical analysis may look for exit points around this level.



In conclusion, the success of DeepSeek's AI model and Vistra's excessive valuations and stretched momentum contributed to the significant drop in Vistra's stock price in February. Investors should watch major support levels on Vistra's chart around $107, $85, and $72, as the stock may encounter buying interest near these levels. The measuring principle's bullish target of $480 can provide valuable insights for investors, but it should be considered alongside other factors and used as part of a comprehensive analysis process.