Key facts
- Tech leaders including Dario Amodei, Sam Altman, and Elon Musk have called for a slowdown in AI development.
- The Philadelphia Semiconductor Index fell as much as 5.7% on Monday.
- The Nasdaq 100 dropped as much as 1.6% on Monday.
- Former Anthropic Researcher Jacob Coxon warned last week that AI could cause human extinction within 10 years.
- Marta Norton, chief investment strategist at Empower, believes AI firms will not meaningfully slow their work due to competition.
- Gene Munster, co-founder at Deepwater Asset Management, cited the Prisoner's Dilemma and US-China dynamics as reasons for continued AI development.
Wall Street indexes declined on Monday, with significant drops in AI-related stocks, as investors reacted to cautionary statements from prominent tech leaders and a former AI researcher regarding the rapid advancement of artificial intelligence. The Philadelphia Semiconductor Index fell as much as 5.7%, and the tech-heavy Nasdaq 100 dropped 1.6%. Tech leaders such as Dario Amodei, Sam Altman, and Elon Musk have publicly called for a slowdown in AI development. These concerns were amplified by comments from Jacob Coxon, a former Anthropic researcher, who warned last week that AI could lead to human extinction within a decade. Despite the sell-off, many market professionals expressed skepticism about a significant slowdown in AI spending. Marta Norton, chief investment strategist at Empower, suggested that competition would likely prevent companies from meaningfully decelerating their AI efforts, viewing the calls for a pause as a potential "PR angle." Gene Munster, co-founder at Deepwater Asset Management, echoed this sentiment, citing the "Prisoner's Dilemma" and the US-China technological competition as drivers for continued AI advancement. Bank of America analyst Vivek Arya characterized the warnings as "noise" compared to the projected surge in AI capital expenditures. However, Mark Hackett, chief market strategist for Nationwide, cautioned that the high-profile warnings could still trigger market volatility, even if the calls for a slowdown do not materialize into concrete actions. He noted that the S&P 500's gains have been heavily influenced by AI leaders, and any shift in sentiment could lead to outsized market moves. Other analysts suggested that broader macroeconomic factors, such as rising long-term Treasury yields and spiking oil prices, also contributed to Monday's market declines. David Stubbs, chief investment strategist at AlphaCore Wealth Advisory, pointed to Brent crude oil reaching nearly $110 per barrel and rising 10-year Treasury yields as potential drivers. Norton advised investors to diversify portfolios, suggesting healthcare and European stocks as areas with limited exposure to the AI theme, while Stubbs recommended industrial metals and gold.