Global AI stocks slide as warnings over rapid development trigger investor concerns

AI-linked stocks across global markets plunged on Monday after leaders of some of the world’s biggest artificial intelligence companies called for a slower pace of development, raising fresh questions over the huge investments that have driven the sector’s rally.The warnings from Anthropic CEO Dario Amodei, backed by OpenAI CEO Sam Altman and xAI chief Elon Musk, added to scrutiny of an AI industry that is increasingly relying on debt and circular financing while raising spending forecasts.Nasdaq e-mini futures fell 1.9%, with chip stocks among the biggest decliners. Nvidia fell 3%, Advanced Micro Devices dropped 5.7% and SpaceX fell 2.6%. Meta and Amazon declined more than 1.4% each.In Europe, technology stocks fell 2.5%, with chip equipment maker ASML down 5.8%, Infineon falling 8.4% and Siemens Energy losing 7.4%.Asian AI-linked stocks also came under pressure. SoftBank fell as much as 13.2%, Taiwan Semiconductor Manufacturing Company declined 1.2% and South Korea’s SK Hynix dropped 6.3%.Amodei calls for slower AI developmentAmodei, in an essay shared on X on Saturday, called on AI companies to slow the pace at which they improve the capabilities of their models, citing growing concerns over potential misuse and the difficulty of controlling increasingly powerful systems.He warned 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.”Anthropic had also released a threat intelligence report detailing the use of its Claude AI models in activities ranging from weapons development and cyber operations to surveillance and fraud.OpenAI researcher Jacob Coxon subsequently resigned, saying the companies developing frontier AI were moving too quickly.“The people building AI earnestly believe that it could kill us all by the end of the decade,” Coxon said.Altman has backed Amodei’s call for greater caution, while also confirming that OpenAI would not proceed with an initial public offering this year, citing safety concerns. He said the risks of human extinction posed by AI were “unacceptable”.Musk also endorsed Amodei’s position, writing: “Dario is right.”AI investment faces fresh questionsThe warnings have raised concerns about whether the extraordinary spending on AI infrastructure can continue if the pace of technological development slows.“If the AI race slows materially, the key question becomes: who pays for all that infrastructure?” said Ipek Ozkardeskaya, senior analyst at Swissquote.“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,” she added.AI-related stocks have powered a significant part of global equity gains since OpenAI launched ChatGPT in 2022. However, concerns over cyberattacks involving AI agents and public opposition to data-centre construction have added to scrutiny of the industry.Despite the latest warnings, Morgan Stanley’s Brian Nowak expects AI spending to exceed $1.2 trillion by 2027.Deutsche Bank said the competitive race between companies and countries remained intense and that it was difficult to imagine firms voluntarily slowing down while rivals continued to advance.Investors remain dividedSome investors dismissed the warnings. Michael Burry, known for betting against the US housing market before the 2008 financial crisis, described the warnings as “hype and puffery” and “cover for real uncontrollable slowing growth”.Others said the warnings could still weigh on AI and semiconductor stocks in the short term because valuations depend on strong demand and continued technological progress.“Their valuations assume both strong demand and a relentless pace of technological progress,” said Charu Chanana, chief investment strategist at Saxo Bank in Singapore, as quoted by Reuters.“When expectations are this high, even a possible delay can trigger profit-taking.”The market sell-off also came as oil prices rose amid concerns over global energy supplies.Brent crude rose more than 3% to around $108.74 a barrel after Saudi Arabia shut a major oil pipeline following an attack.US markets were also facing pressure from higher energy prices and rising Treasury yields, while investors were monitoring the Federal Reserve’s upcoming policy meeting.Meanwhile, the US and Chinese governments are expected to hold AI safety talks this month as part of broader bilateral discussions, according to two people briefed on the plans.Get the latest Business News and Live updates. Download the TOI app.