AI stocks crash after major CEOs call for slowing AI development

AI-linked stocks dipped all across Asia and Europe on Monday after Anthropic CEO Dario Amodei called on the industry to slow the pace of AI development, a plea that was quickly endorsed by OpenAI’s Sam Altman and xAI’s Elon Musk. 

Anthropic CEO Dario Amodei told the industry that “building [AI] too fast is reckless,” warning that a swarm of AI agents could one day inflict hundreds of billions of dollars in damage by “taking over the entire internet,” according to the Guardian.

OpenAI CEO Sam Altman and xAI CEO Elon Musk both agreed with him, with Microsoft’s Satya Nadella and DeepMind’s Demis Hassabis also endorsing a more deliberate, coordinated approach.

The statements hit so hard as they do not come from regulators, but from the founders of the labs positioned at the frontier of the AI race.

AI stocks losses hit in hardware and memory

SoftBank, an OpenAI backer, saw a drop of about 13.2% in Tokyo, also connected in part to Sam Altman’s comments that OpenAI will not go public this year. Memory maker Kioxia also slumped 9.8% and Tokyo Electron lost 3.7% in the same session.

South Korea’s KOSPI shed 3.7%, dragged by SK Hynix, which was down by more than 5%, alongside Samsung Electronics, down 3.7%. In Taipei, TSMC slipped by 1.2%. Z.ai, developer of the GLM model series, dropped by as much as 10.5% after a discounted share placement.

By the time European markets opened, tech stocks had hit a six-week low, with ASML among the stocks that saw a slump due to the slowdown conversations, the Guardian reported.

Expectations remain regardless of slowdown talks

Ipek Ozkardeskaya, senior analyst at Swissquote, described a “sour mood in the markets this morning” and pointed to the bill already committed by these AI companies, stating that the commitments made by these companies remain even if expected compute demand and revenue growth slow.

She also believes a genuine slowdown will drag in credit risk and hit data-center operators that have taken on debt and their lenders hardest.

Charu Chanana, chief investment strategist at Saxo, told the Guardian that memory chips look most exposed, because manufacturers are adding supply against strong demand forecasts that a pause could leave stranded.

Takayuki Miyajima, senior economist at Sony Financial Group, said selling pressure was likely to keep hitting AI and semiconductor stocks in Tokyo, adding that Middle East uncertainty was also adding to the sentiment.

Beijing pushes back

China’s foreign ministry has rejected the slowdown appeal totally, with spokesperson Guo Jiakun telling a press conference that “fearmongering, confrontation and vicious competition will only disrupt the process of global AI governance which serves no one’s interest.”

It is, however, up for debate if any of the CEOs will actually follow their own advice. Markets are pricing in the possibility that they might, and this potential reality is enough to unsettle an AI boom that has been built on strong assumptions regarding future demand.

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