AI-linked tech stocks experienced a sharp downturn on Monday after prominent figures in the artificial intelligence industry advocated for a slowdown in AI development. This call for restraint, aimed at addressing potential risks to humanity, led investors to reassess the value of companies driving the AI revolution. Notable drops included SoftBank, an OpenAI investor, which plunged as much as 13% in Tokyo. South Korea's Kospi index fell by 3.7%, and Japan's Nikkei slipped by 0.6%.
The sell-off was primarily triggered by a public plea from Dario Amodei, CEO of Anthropic, who urged AI companies to "pace the frontier" or coordinate a slowdown in technological development. His stance was publicly supported by other influential AI leaders, including Sam Altman of OpenAI, Elon Musk of xAI and SpaceX, and Sir Demis Hassabis, chairman of Google DeepMind. Mr. Altman also separately confirmed that OpenAI would not go public in 2026, citing a focus on AI safety and alignment, further impacting investor sentiment.
Chipmakers, crucial suppliers to the AI industry, were particularly hit. South Korean chipmakers SK Hynix and Samsung saw declines of 7.6% and 4.9% respectively. In Japan, Kioxia shed over 7%, while Advantest dropped more than 2%. Taiwan Semiconductor Manufacturing Company (TSMC) also fell by 1.2%. Analysts like Dan Baker from Morningstar suggested that the downturn reflects concerns that regulators might slow AI development to prevent negative outcomes or that future instances of AI control loss could also impede progress.
The tech stock decline was exacerbated by broader market anxieties, including expectations that the US Federal Reserve would increase borrowing costs on September 16. This anticipated rate hike, aimed at combating stubbornly high inflation that remains above the Fed's 2% target, added further pressure to the markets. The swaps market indicated a 92% probability of a rate hike, with expectations of 50 basis points of cumulative tightening by year-end, according to Chris Weston at Pepperstone.
Despite the concerns voiced by AI leaders, political figures presented a mixed response. US President Donald Trump voiced opposition to the call for a slowdown, while House Speaker Mike Johnson advised against panic. Nevertheless, traders reacted by selling off their tech holdings, reflecting a significant reassessment of risks and future growth trajectories within the AI sector.
