Exxon Mobil Corp., Chevron Corp., and Shell Plc saw their fourth-quarter earnings decline due to a persistent issue of excess fossil fuel supply and weak demand, which led to a collapse in refining margins, prompting all three to now bet on supplying the energy needed for America’s tech giants to secure dominance in the artificial intelligence race, according to Bloomberg.
However, those plans were dealt a significant blow this week when China’s low-cost DeepSeek AI model emerged as a competitor to OpenAI and Meta Platforms Inc., using only a fraction of the power, which could reduce the need for costly, energy-intensive data centers.
Nevertheless, the world’s largest oil companies are betting on growing demand for electricity generated from natural gas in a future where crude consumption peaks due to the energy transition.
“DeepSeek actually underscores how competitive global and urgent the race for AI leadership is,” Chevron Chief Executive Officer Mike Wirth said in an interview. “We will see the use of these models proliferate across the economy. Demand for AI, the demand for power will grow and reflect that.”
With peak oil demand on the horizon, Big Oil has leaned heavily on buybacks and dividends to attract Wall Street.
However, signs suggest this approach is losing steam—Exxon paid out nearly all of its $36 billion in free cash flow last year, yet still trades at a 46% discount to the S&P 500 Index.
In response, executives are now focusing on the growing demand for natural gas, especially its potential to fuel the data centers powering artificial intelligence.
“With peak oil demand on the horizon, Big Oil has leaned heavily on buybacks and dividends to attract Wall Street. However, signs suggest this approach is losing steam—Exxon paid out nearly all of its $36 billion in free cash flow last year, yet still trades at a 46% discount to the S&P 500 Index. In response, executives are now focusing on the growing demand for natural gas, especially its potential to fuel the data centers powering artificial intelligence.
The US is now the world’s largest oil producer, pumping nearly 50% more daily than Saudi Arabia, and has recently surpassed Australia and Qatar as the top exporter of liquefied natural gas. Despite this, energy stocks account for just 3.2% of the S&P 500, less than half their share a decade ago.
“It’s a point of frustration,” Wirth said in a conversation with Goldman Sachs Group Inc. CEO David Solomon last month. “We are underappreciated in the investment community.”
