The AI boom that fueled a historic rally in semiconductor and infrastructure stocks over the past two years came to a screeching halt Monday, as a wave of selling swept through the market following the launch of DeepSeek, China's open-source AI model.

While NVIDIA Corp. (NASDAQ:NVDA) grabbed the top of headlines for its $600 billion market-cap wipeout — the largest single-day loss in U.S. market history — and triggered a 7.8% fall in the iShares Semiconductor ETF (NASDAQ:SOXX), the pain was even more severe in AI infrastructure stocks, which have soared on expectations of an arms race in AI-driven capital expenditures.

Power, cooling and data center giants that once rode the AI euphoria saw single-day losses exceeding 20%, as investors reassessed the sustainability of relentless spending in the sector.

“What makes Monday’s tech sell-off so jarring is that the valuations of many of these AI and tech companies offer no margin of error. Excessive valuation always becomes a problem, eventually, but fundamental news becomes a heightened problem when it is combined with excessive valuation,” said David Bahnsen, chief investment officer at The Bahnsen Group.

Why These AI Infrastructure Stocks Soared, Why They're Crashing Now

Stocks tied to data centers, power and networking, some of the biggest winners of the AI boom over the past two years, were hammered Monday as investors started questioning whether the relentless spending on AI infrastructure is truly sustainable.

1. Vertiv Holdings Co

Vertiv, a leader in data center cooling, surged 251% in 2023 and another 136% in 2024 as AI-driven computing loads pushed cooling demand through the roof. Yet, with concerns that data center expansion could slow, shares plunged nearly 30% on Monday, marking the worst day since Feb. 2022.

2. Vistra Corp.

Vistra, one of the biggest power suppliers, had been riding the AI energy boom on bets that AI-driven electricity demand would continue to soar. Monday's sell-off crushed that narrative, sending shares down 28%, the worst single-day decline since the company went public in 2017.

In 2024, Vistra returned 257% to shareholders, recording the second-strongest performance among S&P 500 stocks behind Palantir Technologies Inc. (NASDAQ:PLTR).

3. Astera Labs

Astera Labs, which specializes in connectivity chips for AI workloads, went public in 2024 and quickly gained 154% as its products became critical for AI data centers. However, Monday's rout saw the stock plummet nearly 30%, the worst drop since the company’s IPO last March, as investors feared a pullback in AI server deployments.

4. Comfort Systems USA

Comfort Systems, a HVAC and engineering solutions provider for commercial buildings and data centers, surged on AI-related construction demand. Yet, with AI firms now potentially reining in expansion, shares fell 26%. This represented the worst one-day drop since October 1999.

5. Arista Networks

Arista Networks, a leading supplier of high-speed networking equipment for cloud providers, nearly doubled in 2023 as AI-driven upgrades boosted orders. Yet, with DeepSeek's efficiency raising questions about demand for high-end AI networking, the stock slid 22%.

6. GE Vernova

GE Vernova, the energy spin-off from General Electric, had benefited from AI-driven electrification trends, posting a 185% gain in 2024. However, with data center demand expectations cooling, shares slumped 21.5%.

7. Constellation Energy

Constellation, a nuclear energy leader, had been a key bet for long-term AI power needs, rallying 91% in 2024. On Monday, CEG shares tumbled 21% — the largest drop since the company’s IPO in 2022 — amid investor doubts creeping in over AI's real energy demand.

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