AI slowdown fears rattle markets

Wall Street ended lower on Monday as investors grew concerned about the future of artificial intelligence.

AI-related stocks led the selloff after executives at major technology companies warned about the risks of developing advanced AI too quickly.

A weekend essay from Anthropic CEO Dario Amodei, calling for slower AI development to address civilizational risks, sparked the rally.

OpenAI CEO Sam Altman and Elon Musk echoed Amodei’s sentiment and backed calls for stronger safeguards. Altman also said the ChatGPT maker does not plan to pursue an IPO this year, citing safety concerns.

Companies that have profited from the AI boom saw their shares plunge on the news:

Chipmakers led the selloff. The Philadelphia Semiconductor Index dropped 5.2%, while Nvidia fell 3%, AMD lost 4.5%, and Micron declined 5.4%. Lam Research, Applied Materials and Bloom Energy each dropped more than 6%.

The selloff spread overseas. Europe’s technology sector dropped 2.2%, led by a 6% decline in ASML. In Asia, SoftBank plunged more than 10%, while TSMC and SK Hynix also declined.

China responded as well
Warning of “grave danger” from a Chinese AI lead, Amodei called for maintaining restrictions on advanced AI chip and equipment sales to China.

This angered Chinese officials; a government spokesperson said yesterday that “fearmongering” harms global AI governance.

President Donald Trump also rejected calls for a slowdown. In a Truth Social post yesterday, he aimed at the Anthropic CEO, claiming the only real AI safeguard is a “strong” president, while emphasizing the need to stay ahead of China.

Meanwhile, Microsoft tightens AI safeguards
Microsoft added to the industry-wide focus on AI safety by releasing a provisional code of conduct for training new AI models. The guidelines prohibit models from helping with weapons production, violent or sexually explicit content, or dangerous substances. Microsoft AI CEO Mustafa Suleyman said the company developed the principles over several months.

Additionally, investors are also questioning whether tighter safety rules could slow AI spending. Morgan Stanley expects global AI spending to exceed $1.3 trillion by 2027, highlighting the technology’s growing role in the global economy.