NEW YORK: AI-linked stocks plunged across global markets on Monday after leading technology executives warned about the risks of rapid artificial intelligence development.
The sell-off raised fresh concerns about the billions of dollars flowing into the AI industry. That spending has helped push global stock markets to record levels.
The decline spread across the technology sector as companies increasingly rely on debt and complex financing to fund major AI investments.
At the same time, global borrowing costs continue to rise, adding pressure to companies investing heavily in artificial intelligence.
AI Leaders Raise Safety Concerns
Anthropic CEO Dario Amodei called on AI companies to slow the pace of model development.
In an essay shared on X on Saturday, Amodei warned about the growing risks of advanced AI and its potential misuse.
xAI chief Elon Musk and OpenAI CEO Sam Altman also backed Amodei’s concerns.
Altman said OpenAI would not proceed with an initial public offering this year, citing safety concerns.
Amodei warned that AI agents could become capable of taking control of large parts of the internet within six to 12 months.
He said such a development could potentially cause hundreds of billions of dollars in damage.
Altman separately described the risk of human extinction from AI as “unacceptable”.
Chip Stocks Lead Global Sell-Off
Wall Street’s Nasdaq 100 index fell 1.7 per cent in early trading.
Chipmakers suffered some of the biggest losses as investors reacted to the possibility of slower AI spending.
The Philadelphia Semiconductor Index dropped 6pc.
Nvidia fell 3.5pc, while Advanced Micro Devices declined 5.6pc. Micron also lost 6.7pc.
Semiconductor equipment makers faced even steeper losses.
Lam Research dropped 8pc, while Applied Materials fell 7pc.
Bloom Energy declined 8.9pc and GE Vernova lost 7.6pc.
Musk’s SpaceX also fell 2.5pc.
“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,” said Steve Sosnick, chief market analyst at Interactive Brokers.
European and Asian AI Stocks Also Fall
The sell-off spread into European markets.
Europe’s technology sector fell 2.3pc, with ASML declining 6.7pc.
Infineon and Siemens Energy also recorded significant losses.
Asian markets faced similar pressure.
SoftBank fell as much as 13.2pc, while major chipmakers TSMC and SK Hynix also declined.
The global reaction highlighted concerns about the sustainability of the massive investment cycle surrounding artificial intelligence.
AI Risks Spark Wider Debate
Concerns about AI safety have increased in recent weeks.
Earlier this month, Anthropic researcher Jacob Coxon resigned and warned that some AI developers believe the technology could pose an existential threat.
Anthropic later released a threat intelligence report detailing the use of its Claude AI models in activities involving weapons development, cyber operations, surveillance and fraud.
The developments have increased pressure on technology companies to address the potential misuse of increasingly capable AI systems.
US lawmakers have also raised concerns about rapid AI development and called for stronger regulations.
However, US President Donald Trump has defended the country’s AI ambitions.
Trump described AI critics as “very negative forces” and said he wanted the United States to remain the global leader in the industry.
China and US Expected to Discuss AI Safety
AI-related companies have driven a significant portion of global equity gains since OpenAI launched ChatGPT in 2022.
However, the industry now faces growing opposition.
Cyberattacks involving rogue AI agents and public concerns over data centre construction have added to the debate.
The United States and China are expected to hold talks on AI safety this month as part of broader bilateral discussions.
China’s state-backed Global Times, meanwhile, criticised Amodei’s proposal and described it as a “Cold War playbook” aimed at slowing China’s technological development.
Some Investors Reject AI Warnings
Not all investors believe the warnings will lead to a major slowdown in AI investment.
Michael Burry, known for his successful bet against the US housing market before the 2008 financial crisis, dismissed the warnings as “hype and puffery”.
He argued that the comments could instead provide cover for weakening economic growth.
Morgan Stanley analyst Brian Nowak also expects AI investment to remain strong.
He forecast earlier this year that AI spending could exceed $1.2 trillion by 2027.
Deutsche Bank said the competitive race between companies and countries remained intense.
The bank said it was difficult to see companies voluntarily reducing investment while their rivals continued to develop advanced AI systems.
AI Investment Continues Despite Market Pressure
Despite the market sell-off, major AI companies continue to attract significant investment.
Anthropic is reportedly preparing for a public debut next month. The company is also in talks with Nvidia about becoming an anchor investor, according to sources cited by Reuters.
Japanese chipmaker Kioxia Holdings is also considering raising at least $10 billion through a listing of American depositary receipts.
The latest market decline therefore highlights a growing tension in the AI industry.
Companies face pressure to develop increasingly powerful systems while investors continue to expect massive growth from the sector. At the same time, governments and researchers are demanding stronger safeguards against the potential risks.
