AI-linked stocks came under pressure on Monday as growing concerns over the risks of rapidly advancing artificial intelligence prompted some of the technology industry's biggest names to call for greater caution.
The sell-off highlights a new dilemma for investors. The AI boom has been driven by expectations of enormous spending on data centres, advanced chips and computing infrastructure. But growing calls for tighter safety measures and a slower pace of development could raise questions about how quickly that spending can continue.
Nvidia, the world's most valuable company and a key beneficiary of the AI boom, fell 3.3 per cent by the close of trading in New York.
Other major chipmakers also suffered:
Advanced Micro Devices (AMD): down 4 per cent
Micron Technology: down 5 per cent
Sandisk: down 5 per cent
Taiwan Semiconductor Manufacturing Company (TSMC): down 1.2 per cent
ASML: down 6 per cent
The tech-heavy Nasdaq index fund fell 0.5 per cent.
The weakness was not confined to the US. SoftBank, a major investor in OpenAI, plunged 13 per cent in Japan, while South Korea's Kospi index fell 3 per cent amid weakness in chipmakers exposed to AI demand.
The immediate trigger was growing concern within the AI industry itself about the speed at which increasingly powerful systems are being developed.
Anthropic chief executive Dario Amodei has argued for a slower pace, warning that increasingly autonomous AI agents could create significant economic and security risks if their capabilities advance faster than safeguards.
The argument has gained support from several prominent technology executives, including OpenAI chief executive Sam Altman, Google DeepMind chief Demis Hassabis and SpaceX founder Elon Musk.
OpenAI has also indicated that it is prepared to strengthen external evaluation of its AI safety practices, following Anthropic's move to give outside evaluators greater access to its systems.
The debate has also become political. US President Donald Trump has rejected calls for stronger controls on AI, arguing that excessive regulation could weaken America's position in the global technology race.
The administration's position reflects a broader concern in Washington that slowing AI development could allow China to gain an advantage in a strategically important technology.
China, meanwhile, has also intensified its focus on AI security. A senior Chinese intelligence official has warned that advanced US AI models could pose risks to China's critical information infrastructure and called for stronger national AI safeguards.
For investors, the bigger question is whether the safety debate will translate into lower spending on AI infrastructure.
That appears unlikely in the immediate future. The competition among technology companies and countries remains intense, with billions of dollars already committed to data centres, semiconductors and computing capacity.
A slowdown in the development of frontier AI models could, however, change the composition of spending rather than eliminate it.
More investment could flow towards:
AI safety and monitoring
External testing and evaluation
Governance and compliance
Cybersecurity
More efficient computing infrastructure
This could create both winners and losers within the broader AI ecosystem.
Interestingly, some businesses that face disruption from AI rallied on Monday. Advertising group WPP rose 5 per cent in London, while data and analytics company Relx also gained 5 per cent.
Relx had previously suffered after Anthropic introduced new AI tools capable of handling data and automation-related tasks. The latest debate over the pace of AI development may have encouraged investors to reassess the immediate threat posed to traditional businesses.
The AI safety debate comes at a crucial stage for Anthropic and its rivals. Anthropic is reportedly on track to post a positive adjusted operating income for a second consecutive quarter, an important milestone as it prepares for a potential US stock market listing.
OpenAI has also been considering a public listing, although its chief executive has indicated that the company does not expect to go public in 2026.
For investors, this creates an unusual combination: AI companies are under pressure to demonstrate profitability and justify massive infrastructure spending while simultaneously facing calls to slow the development of increasingly powerful systems.
The latest sell-off does not necessarily signal the end of the AI investment boom. Instead, it shows how sensitive AI valuations have become to questions beyond earnings and chip demand.
The market is beginning to consider a more complicated equation: How much AI investment can continue if governments, regulators and even AI developers themselves become increasingly concerned about the technology's risks?
The answer could determine whether the next phase of the AI boom is driven mainly by bigger models and more computing power, or by safer, more controlled and commercially sustainable AI systems.