Shares in artificial intelligence (AI) companies fell sharply across global markets on Monday after leading AI executives warned of risks from rapid development, delivering the strongest setback yet to an investment boom that has driven world markets to record highs.
The selloff hit an industry increasingly reliant on debt and circular financing to fund ambitious spending plans, even as global borrowing costs, reflected in multi-year-high bond yields, continue to rise, reports Reuters.
Anthropic CEO Dario Amodei, in an essay posted on X on Saturday, urged AI companies to slow the pace of model development amid growing concerns over misuse. Elon Musk, who runs xAI, and OpenAI Chief Executive Sam Altman agreed with his comments. Altman also said OpenAI would not proceed with an initial public offering this year, citing safety concerns.
Wall Street’s Nasdaq 100 fell 1.7 per cent in early trading, led by chip stocks that had driven much of the AI rally. The Philadelphia Semiconductor Index dropped 6 per cent, with Nvidia down 3.5 per cent, Advanced Micro Devices 5.6 per cent and Micron 6.7 per cent. SpaceX declined 2.5 per cent.
Equipment makers Lam Research and Applied Materials fell 8 per cent and 7 per cent respectively, while tech-focused utilities Bloom Energy and GE Vernova lost 8.9 per cent and 7.6 per cent. Europe’s tech sector fell 2.3 per cent, dragged down by ASML’s 6.7 per cent decline along with losses at Infineon and Siemens Energy. In Asia, SoftBank fell as much as 13.2 per cent, while TSMC and SK Hynix also retreated.
“If this does lead to sort of a slowdown and a rethink of AI spending, that will have ramifications for the economy and some important sectors of the stock market, because essentially, we’ve been running hot based on AI spending,” said Steve Sosnick, chief market analyst at Interactive Brokers.
Concern over AI’s potential harms had already increased earlier this month after Anthropic researcher Jacob Coxon resigned, saying those building AI genuinely believe it could kill everyone by the end of the decade. Days later, Anthropic published a threat intelligence report detailing the use of its Claude models for weapons development, cyber operations, surveillance and fraud.
Over the weekend, Amodei wrote that within six to 12 months, AI agents “could be capable of taking over the entire internet potentially causing hundreds of billions of dollars in damage”. Altman separately said AI extinction risks were “unacceptable”.
While several US lawmakers have raised concerns over AI’s rapid progress and pushed for new rules, President Donald Trump said on Sunday that AI critics were “very negative forces” raising scenarios that would not occur, adding that he wanted the US to remain the industry leader.
AI-linked trades have driven much of the rise in global equities since OpenAI released ChatGPT in 2022. However, cyberattacks by rogue AI agents and opposition to data-centre construction have recently increased pushback.
The US and Chinese governments are expected to hold AI safety talks this month as part of broader bilateral discussions, though China’s state-backed Global Times dismissed Amodei’s essay as a “Cold War playbook” aimed at limiting the country’s technological progress.
Michael Burry, known for his bets against the US housing market before the 2008 crisis, called the warnings “hype and puffery” serving as “cover for real uncontrollable slowing growth”. Morgan Stanley’s Brian Nowak, however, forecast AI spending would exceed $1.2 trillion by 2027.
Deutsche Bank said a slowdown appeared unlikely for now, given competition between companies and countries. Anthropic is also pressing ahead with a public listing expected next month, with sources saying it is in talks to bring Nvidia in as an anchor investor. Japanese chipmaker Kioxia Holdings is also considering a listing of American depositary receipts to raise at least $10 billion.
