Global artificial intelligence-linked stocks experienced a significant downturn on Monday, following cautionary statements from prominent AI industry leaders regarding the risks associated with rapid development. These warnings represent the most substantial threat to date for the billions of dollars invested in the sector, which had previously propelled global markets to record highs.
Anthropic CEO Dario Amodei, in an essay published on X, urged AI companies to decelerate the pace of advancing model capabilities due to escalating fears of artificial intelligence misuse. This sentiment was echoed by Elon Musk, CEO of xAI, and Sam Altman, CEO of OpenAI, who both expressed agreement with Amodei's concerns.
Altman also indicated that OpenAI would not proceed with an initial public offering (IPO) this year, citing safety considerations. The CEOs' remarks intensified scrutiny on AI-related sectors, which have seen companies increasingly rely on debt and circular financing to fund their ambitious AI projects. This comes at a time when global yields, a gauge of borrowing costs, have reached multi-year highs.
“If the AI race slows materially, the key question becomes: who pays for all that infrastructure? The leases, debt and power commitments remain even if expected compute demand and revenue growth slow. And that could bring credit risk increasingly into the AI story,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Futures tracking Wall Street’s Nasdaq e-mini futures fell 1.9%, with chip stocks, which have been major beneficiaries of the AI boom, experiencing the sharpest declines. Nvidia dropped 3%, Advanced Micro Devices slid 5.7%, and SpaceX declined 2.6%. Major tech companies like Meta and Amazon.com saw their stocks fall over 1.4% each.
European tech stocks plummeted 2.5%, with chip equipment giant ASML down 5.8%. Chip maker Infineon slid 8.4%, while AI equipment maker Siemens Energy lost 7.4%. Across Asia, SoftBank, an investor in OpenAI, tumbled as much as 13.2%. Taiwan Semiconductor Manufacturing Company slipped 1.2%, and South Korea’s SK Hynix slid 6.3%.
Amodei warned that within six to 12 months, AI agents could potentially gain control of the entire internet, leading to hundreds of billions of dollars in damages. Anthropic released a threat intelligence report detailing instances where its Claude AI models were allegedly used for weapons development, cyber operations, surveillance, and fraud.
Concerns about AI's potential harm were amplified following the resignation of Anthropic researcher Jacob Coxon, who stated that developers of AI believe it could cause human extinction by the end of the decade. OpenAI’s Altman described the risks of AI-driven human extinction as “unacceptable.”
While some U.S. lawmakers have expressed concern and called for new regulations, President Donald Trump has characterized AI critics as "very negative forces" promoting unlikely scenarios, emphasizing his desire to maintain U.S. leadership in the industry. The rapid growth of AI-related trades has been a significant driver of global equity gains since OpenAI's ChatGPT debut in 2022. However, recent reports of cyberattacks by rogue AI agents and public opposition to data center construction have fueled opposition to the industry's expansion.
The United States and China are reportedly planning to hold AI safety talks as part of bilateral discussions scheduled for this month. However, China’s state-backed Global Times criticized Anthropic's essay, labeling it a "Cold War playbook" aimed at hindering China's technological progress.
Some investors have dismissed the warnings from Anthropic and OpenAI. Michael Burry, known for his accurate predictions regarding the 2008 financial crisis, suggested the concerns were "hype and puffery" and a "cover for real uncontrollable slowing growth." Conversely, others point to substantial capital spending commitments, with Morgan Stanley forecasting AI spending to exceed $1.2 trillion by 2027, suggesting development is unlikely to decelerate.
“The key question is whether this is the first sign that the extraordinary AI investment cycle might eventually moderate. For now, that seems unlikely. The competitive race between companies and countries remains intense, and it’s difficult to imagine firms voluntarily stepping back while rivals continue to push ahead,” Deutsche Bank stated in a note.
Amidst these discussions, Anthropic is reportedly in talks to secure Nvidia as an anchor investor for its upcoming public debut next month. Despite this, the recent warnings are expected to continue to cast a shadow over AI and chip stocks in the short term, as their current valuations are predicated on sustained demand and rapid technological progress. Any perceived delay could trigger profit-taking among investors.