Wall Street hit by tech sell-off after AI bosses push for slowdown
Tech stocks fell sharply on Monday after AI companies called for a slowdown in the development of the technology.
The Nasdaq Composite dropped as much as 1.3pc to 25,992.54 after Anthropic’s chief executive Dario Amodei called for tech companies to reduce the speed of its development.
The tech-heavy index was particularly vulnerable to the sell-off. Sandisk, Intel and Micron all fell more than 6pc, while Nvidia, the world’s largest company by market value, was 3.8pc lower.
The Dow Jones Industrial Average dropped as much as 0.4pc to 52,385.52 and the benchmark S&P 500 declined 0.8pc to 7,597.05.
Mr Amodei’s call for an AI slowdown could mean less spending on data centres and AI chips, which have powered the stock market rally of the last two years.
However, Donald Trump rejected calls for a slowdown, saying there was a “sick conspiracy” against AI.
06:37pm
Signing off…
Thanks for following today’s coverage as the fallout to calls for an AI slowdown continues.
We’ll be back tomorrow morning.
05:08pm
Vance labels requests for regulation “a Trojan horse”
JD Vance, the US Vice-President, has rejected calls from tech leaders for a slower pace of AI development and government regulation, calling their requests “a Trojan horse.”
Mr Vance said: “I have to say, just personally, I feel a little bit weird about the fact that you have so many frontier AI tech companies kind of coming to the Government and begging the Government to regulate them.”
“It feels a little bit to me like a bit of a trojan horse.”
It comes as Donald Trump also dismissed calls for safety guardrails, arguing a strong president and regulatory enforcement are sufficient, while warning that slowing down would cede AI leadership to China.
Meanwhile, Democrats, led by Chuck Schumer, the Senate Leader, and Barack Obama, are calling the rapid private-sector expansion of AI potentially dangerous if left unchecked.
“This is something that is moving very fast in private hands, and if we don’t get on top of it, I think it can be dangerous,” the former President said.
04:47pm
Bernie Sanders and Steve Bannon unite in call for AI guardrails
Bernie Sanders and right-wing activist Steve Bannon are uniting to demand stricter guardrails on AI at a bipartisan “Pro-Human Assembly” in Washington.
Senator Sanders has called for a federal regulator and a permanent ban on “superintelligent” AI, amid fears of tech companies losing control of rapidly advancing models.
Mr Bannon has endorsed these proposals, mobilising his audience against both the industry and the Trump administration’s deregulatory approach.
The coalition, which includes lawmakers from both parties, reflects growing public anxiety, with two-thirds of Americans viewing AI as a high risk to society.
Mr Sanders said last week: “Nearly every day, there is a frightening new story about how Big Tech companies are losing control of the technology they are developing, with potentially cataclysmic results.”
“It is irresponsible for society to allow them to move forward and make these products even more advanced.”
04:34pm
AI has “enormous” potential to accelerate fusion rollout
Artificial intelligence has “enormous” potential to help Britain develop fusion energy, according to the UK’s energy minister.
Michael Shanks told The Telegraph that the UK must harness the power of AI to run a more efficient energy system despite its “challenges”.
Britain signed an agreement with the US on Monday afternoon to help speed up the development of fusion, which releases huge amounts of energy by combining hydrogen atoms, essentially replicating the process that powers the sun.
Under the agreement, UK and US fusion supercomputers will be connected across the Atlantic, allowing AI models in both countries to be trained on shared data.
The US and UK have also committed to closer cooperation on regulating fusion energy as part of a bid to attract investment.
Michael Shanks told The Telegraph: “AI has got enormous potential to help get us to fusion energy faster, but also to run a more efficient energy system.
“But clearly, the pace of the rollout of that comes with challenges that we have to face, and where there are risks that have surfaced, we should take those very seriously.”
He added: “I think it is important that we absolutely are driven by a regulatory approach.
“I think there is a real chance for us to get all the advantages from AI but manage it carefully. But there’s no doubt this is a fast-moving landscape, faster than perhaps technology has moved for a very long time, and we have to be on top of that.”
04:20pm
Mark Carney calls for global AI safety board
Mark Carney, the Canadian Prime Minister, has called for a global “technology stability board” to ensure AI is developed safely.
Modelled after the Financial Stability Board, Mr Carney said the body is necessary because international coordination is required to prevent advanced AI systems from causing harm while maximising value creation.
Mr Carney told Bloomberg: “There’s a need for coordination. A technology stability board, in our view, along the lines of the Financial Stability Board, makes sense.”
“It’s an opportunity – and I think ultimately what it’s going to mean is greater value creation and greater value delivery to people.”
His call for global guardrails contrasts with comments made by Donald Trump, who has dismissed calls for AI regulations and criticised tech bosses backing a slowdown.
04:05pm
OpenAI calls on Labour for mandatory safety regulations
OpenAI has called on the Government to introduce mandatory safety rules for major AI developers.
Under the proposed framework, the UK’s AI Security Institute (AISI) would play a central role in third-party testing and creating adaptive technical standards.
Tom Guff-Gordon, the company’s head of policy in EMEA, told Politico: “OpenAI is in a position to support legislation in the UK to establish durable, mandatory, capability-based requirements for frontier AI that would build on the set of voluntary commitments that we currently have.”
This legislation would transition current voluntary agreements into enforceable standards, bringing the UK in line with emerging frameworks in the EU and US.
OpenAI is calling for a narrow regulatory scope focused on high-risk national security, cybersecurity, and safety incident reporting for advanced models.
The recommendation comes as the Labour Government faces mounting pressure from lawmakers to address AI safety following recent industry incidents and safety concerns.
03:09pm
Trump attacks ‘perfect little angel’ AI boss after push for slowdown
Donald Trump launched a personal attack against the boss of Claude chatbot-maker Anthropic after he called for a slowdown in the technology’s development.
The US president said Dario Amodei was pretending to be a “perfect little angel” after suggesting that calling for an industry-wide slowdown at the weekend.
He wrote on his Truth Social platform: “There is a SICK conspiracy going on against AI and Data Centers, and the only one that is happy about it is China.”
02:52pm
US tech stocks drop as AI bosses push for slowdown
US tech stocks fell sharply in early trading on Monday after AI companies called for a slowdown in the development of the technology.
The Nasdaq Composite plunged as much as 1.3pc to 25,992.54 after Anthropic’s chief executive Dario Amodei called for tech companies to reduce the speed of its development.
The tech-heavy index is vulnerable to the sell-off, given that the sector accounts for approximately 60pc of its entire weight.
Sandisk, Intel and Micron all fell more than 6pc, while Nvidia, the world’s largest company by market cap, was 3.8pc lower.
The Dow Jones Industrial Average dropped as much as 0.4pc to 52,385.52 and the benchmark S&P 500 declined 0.8pc to 7,597.05.
02:17pm
AI bosses ‘struggling to justify pricing’
US tech companies are pushing for more AI regulation to protect themselves from rising competition, analysts have said.
Richard Farr, chief market strategist at Pivotus Partners, suggested calls for regulation are designed to stifle competition.
He likened it to MIFID (Markets in Financial Instruments Directive), an EU law which regulates financial markets and investment services.
“If you’re struggling to justify your pricing and afraid of competition, you bring in regulation to create a regulatory moat,” Mr Farr posted on X. “It’s basically MIFID, but for AI.”
His comments echoed those of sceptics such as The Big Short’s Michael Burry, who called the efforts “self-serving”.
02:01pm
FTSE 100 defies tech sell-off
The FTSE 100 rose on Monday as investors sought safety from the tech sell-off.
The UK’s flagship stock index was up 0.6pc as software companies were boosted by the potential slowdown in AI.
It was also boosted by higher oil prices, which lifted Shell and BP by more than 1pc.
By contrast, the Cac 40 in Paris was down 0.9pc in afternoon trading, while the Dax in Franfurt was down 0.9pc, after US tech leaders called for a slowdown in AI development.
Charu Chanana of Saxo Bank said: “In the short term, these warnings could still weigh on AI and chip stocks.
“Their valuations assume both strong demand and a relentless pace of technological progress,.
“When expectations are this high, even a possible delay can trigger profit-taking.”
01:31pm
Burnham: Debating AI risks is ‘a good thing’
Andy Burnham welcomes the new focus on the dangers AI could pose to the world, Downing Street said.
The Prime Minister thinks it is a “good thing” that leading AI figures are publicly speaking about the risks from the technology to global security, his official spokesman said.
Mr Burnham has cancelled engagements today and tomorrow following the death of his father Roy, who was suffering from Alzheimer’s.
Asked about the new industry focus on AI safety, the Prime Minister’s official spokesman said: “What the Prime Minister thinks is that it’s a good thing that the companies developing the most advanced AI systems are now talking openly about the risks as well as the opportunities.
“These risks cross borders. That’s why we’re working closely with the companies developing the most advanced systems and with our allies and international partners.
“It’s also why the AI Security Institute exists to build a rigorous, scientific understanding of the capabilities of the most advanced AI systems and the risks they pose, so that policy decisions are grounded in evidence rather than speculation.”
The spokesman also insisted that AI “offers huge opportunities that we want the UK to tap into”, including for transforming how public services are delivered, and raising living standards.
01:08pm
‘They’ve realised they can’t recoup their costs’
Telegraph readers were sceptical of the calls for a slowdown in AI development from some of the most high profile figures in US tech.
You can read some of their comments below and join the debate here.
12:37pm
AI boom showing signs of ‘vulnerability’
The AI-linked rally that has seen world stock markets soar over the last two years is showing signs of vulnerability, the Bank for International Settlements (BIS) warned.
The institution, known as the central bank for central banks, said investors were becoming “increasingly cautious” about the profitability of future AI investments, especially as the leverage of major US tech firms continued to rise.
Frank Smets, head of economic analysis at BIS, said: “The AI momentum, which had propelled equity markets and contributed to the resilience of the global economy of the last year, has begun to show growing signs of vulnerability.”
The comments were made on Friday, ahead of the BIS report’s publication on Monday and before the sharp downturn in tech stocks.
The BIS report also pointed to an uncertain global backdrop of strains on public finances, exacerbated by geopolitical tensions and volatile energy prices.
Mr Smets added: “It’s related to the fiscal fragility that comes also with higher uncertainty in the world economy.”
12:03pm
Silicon Valley’s attempt to slow AI race triggers surge of suspicion
Silicon Valley’s tech giants have spent the last few years competing in a trillion-dollar arms race to create superintelligent AI.
Now they say we should all slow down.
Dario Amodei, Anthropic’s chief executive, called for co-ordinated “pacing” of AI development, saying we might have just six months until the technology unleashes catastrophic damage on the world.
Some hailed Amodei’s intervention as a valiant attempt to save the world, while others thought it was far more self-serving, particularly as he prepares Anthropic for a historic stock market listing.
11:30am
AI slowdown aimed only at tech giants, says OpenAI founder
One of the co-founders of OpenAI said only the biggest players need to slow their development of the technology, following warnings from a host of bosses over the weekend.
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Greg Brockman, president at the ChatGPT maker, encouraged smaller companies to keep working on their own projects, despite warnings from OpenAI boss Sam Altman, Elon Musk and Anthropic chief executive Dario Amodei.
“A lot of people have this reaction of saying, ‘Well, am I going to be able to keep making my open source model? Am I going to be able to keep doing my hobby aside project?’ And the answer should be absolutely yes,” he told Bloomberg’s Odd Lots podcast.
“When we’re talking about pacing, we’re really talking about this frontier. We’re talking about these massive supercomputers that are hundreds of billions of dollars worth of capital expenditure.”
Mr Brockman said OpenAI had slowed down its frequency of training AI models after the recent hack of online platform Hugging Face, where OpenAI’s autonomous agents broke into another company’s servers during testing.
He said the hack was “not a surprise” as those agents had not gone through the company’s “alignment training” — an industry term for protocols to ensure safety.
11:15am
China criticises AI warnings
Chinese officials rebuffed warnings from US tech giants that the world must slow down the pace of AI development over safety concerns.
Foreign ministry spokesman Guo Jiakun said: “Fearmongering, confrontation and vicious competition will only disrupt the process of global AI governance and serve the interests of no-one.”
He added that countries should promote “open, inclusive, universally beneficial and ethical” development of AI.
11:02am
Wall Street heavyweights poised for downturn
US stocks were on track for a sell-off of AI heavyweights after tech bosses set out their safety concerns.
Shares of Nvidia fell more than 2pc in premarket trading, while Meta and Amazon were down over 1pc each.
Chipmakers fell, with Intel, AMD and Marvell Technology down nearly 6pc, 5pc and 6pc, respectively.
The losses in technology stocks could set the tone for markets ahead of a potential interest rate hike later this week.
Traders are pricing in an 88pc chance of a rate increase by the Federal Reserve following the latest inflation threat from the Iran war, which has pushed the price of oil back above $108 a barrel.
In premarket trading, the Nasdaq 100 was down 1.8pc, the S&P 500 fell 0.8pc and the Dow Jones Industrial Average had fallen 0.3pc.
10:24am
HSBC bets on AI to drive profits later this year
HSBC is still betting on the US, Japan and China despite the latest concerns over AI.
The lender’s private bank said it expects strong earnings and investments in AI infrastructure will ensure the global economy holds up going into the final three months of the year.
Bosses said they were still betting heavily on stocks in the US, Japan, mainland China, Hong Kong, Singapore and South Korea, which have all benefitted from the excitement surrounding AI.
It said it was backing companies in the cloud and semiconductors, as well as companies expected to benefit from governments’ focus on security and energy independence.
Willem Sels, global chief investment officer at HSBC Private Bank, said: “Investors are navigating multiple sources of uncertainty, but broadening earnings momentum and resilient economic activity continue to support a risk-on environment.
“As AI progresses from novelty towards monetisation, we’re deploying multi-asset portfolio strategies to capture opportunities from structural growth trends, while adding bonds and alternative assets to help cushion ongoing volatility. ”
10:09am
China stocks slip over AI slowdown fears
China stocks edged lower after the push for a slowdown in the development of AI.
The Shanghai Composite index closed down nearly 0.1pc at 3,885.33, while the blue-chip CSI300 index was down 0.7pc.
Tech shares led declines, with the start-up board ChiNext Composite index weaker by 1.1pc.
In Hong Kong, the benchmark Hang Seng Index added 0.5pc and the Hang Seng Tech Index was little changed.
09:32am
European stocks fall in tech sell-off
Stock markets tumbled across Europe after AI bosses called for a slower pace of development to ensure the safety of the technology.
The Cac 40 in France, the Dax in Germany and the Ibex 35 in Spain were each down 0.6pc after Anthropic chief executive Dario Amodei called on AI companies to slow the rate at which they advance model capabilities.
Semiconductor chip makers and their suppliers were among the worst hit, with Germany’s Infineon down 7.2pc and Dutch companies ASML and ASMI lost 4.8pc and 8.1pc, respectively.
Jim Reid, an analyst at Deutsche Bank, said: “For markets, the key question is whether this is the first sign that the extraordinary AI investment cycle might eventually moderate.
“For now, that seems unlikely. The competitive race between companies and countries remains intense, and it’s difficult to imagine firms voluntarily stepping back while rivals continue to push ahead.
“It is hard to see China standing still. Indeed, that’s something President Trump said yesterday in response to the weekend news. He didn’t seem in favour of any kind of pause.”
09:14am
Software stocks jump amid AI concerns
Software stocks leapt higher in early trading as chatbot makers pushed for a slowdown in development.
The sector was the best performer across the FTSE 100 and FTSE 250 after the bosses of OpenAI and Anthropic called for a “pacing” of AI development to ensure the safety of the technology.
Software companies sank 22pc last year and have fallen 10pc so far this year over concerns that AI will make them redundant.
Sage jumped 3.5pc, Relx rose 3.4pc and London Stock Exchange Group climbed 2.9pc in a revival for the sector.
08:56am
Burry accuses AI bosses of ‘hype and puffery’
Michael Burry, the investor made famous in the Big Short, said the makers of ChatGPT and Claude were “self-serving” in their push for an AI slowdown.
He wrote on X that the large language models, known as LLMs, used in the chatbots “are not AI” and will not become artificial general intelligence capable of exceeding human intelligence.
He suggested the talk of a slowdown covered for a potential real slowdown in investment, just as OpenAI and Anthropic prepare for blockbuster listings on Wall Street.
He said: “There is nothing AI to slow down.
“Competition is coming up fast, slowing benefits incumbents.
“IPOs need hype & puffery; ‘we are so awesome it could become dangerous’ is hype & puffery.”
08:50am
Altman says world cannot wait for governments to pass safety laws
The chief executive of OpenAI said there needed to be international coordination on “pacing” AI but urged tech bosses not to wait for regulations.
Sam Altman, the boss of the ChatGPT maker, said there was no reason to wait for governments to pass laws designed to ensure AI development remains safe.
He said slowing down development would avoid power being concentrated into too few hands and limit the risk of losing “control” of the technology
He wrote on X: “When we talk about ‘pacing’, we do not mean ‘stopping’. Progress has been rapid and will continue to be. But it should be slower than it otherwise could be; interventions like safety cases and monitoring have significant costs.
“Pacing will be well worth this cost; no amount of American competitive pressure should justify recklessness, or let capabilities get ahead of alignment and monitoring.
“Where we will need the help of our government is for international coordination. But first we should do what we can ourselves.”
He added there were “two ways AI progress could go very badly”.
“First, we could lose control of the future to AI. This is unacceptable; we are unapologetically on Team Humanity, and AI must always serve people.
“Second, we could end up in a world with too much concentration of power. If an extraordinarily powerful AI is used by one person or company to impress their worldview onto everyone else, the results could be extremely dystopian.”
08:28am
Big Short investor says AI cannot be slowed down
One of the investors made famous in The Big Short said AI development cannot be slowed down – but said is nothing to worry about.
Michael Burry, who bet against the housing market before the subprime crash that helped trigger the global financial crisis, said AI was creating more sophisticated language abilities, which cannot be halted.
However, he said these language models were not capable of reason, which is what would pose a threat to humanity.
On whether AI can be slowed down, he said on his Substack newsletter: “My thesis is no, and at the top of both OpenAI and Anthropic they know it. Rather, this is simply an attempt to increase the perception of their power before their IPOs.
“I propose it is hard to slow down AI when what is advancing is increasingly sophisticated language models at the frontier.”
He added: “The original approach to AI was to generate a true capacity for reason first, but it was never realized, and the field pivoted to language first because it was easier. As a result, there is nothing to fear.”
08:08am
FTSE 100 rises after jump in oil prices
Britain’s stock market shrugged off the tech sell-off after it was boosted by a sharp rise in oil prices.
The FTSE 100, known for its low exposure to the tech sector, climbed 0.3pc to 10,684.56 after Brent crude tipped back above $108 a barrel.
Energy giants Shell and BP both jumped more than 1pc after a vital pipeline through Saudi Arabia was attacked by Iran-backed militia, pushing oil up more than 2.5pc.
The domestically focused FTSE 250 fell 0.3pc to 23,904.55.
08:01am
AI investors banking on future profitability, says former Bank chief
A former deputy governor of the Bank of England warned that investors in AI that they are banking on huge returns from the trillions being spent on infrastructure.
Sir Jon Cunliffe, who worked at the bank for a decade until 2023, told BBC Radio 4’s Today programme: “Estimates of the capital investment going into AI over the next couple of years just keep rising. Now we’re looking at estimates of potentially $ 3-4tn over the next couple of years.
“Whereas at the beginning of this, a couple of years ago, it was financed by the cash reserves, the surpluses of the big AI companies themselves, now it’s increasingly being financed by external finance, equity, and importantly debt.”
He added: “The issue for financial stability authorities is that all of that investment is being supported by expectations of the future profitability.”
The warning suggests that the debt binge among AI giants helping to drive stocks ever higher could unravel like a house of cards, hitting the wider stock market in a painful correction.
07:52am
Ex-Bank official warns over ‘fast correction’
Britain risks seeing a “wide correction” in stock markets fuelled by slowing artificial intelligence, the former deputy governor for financial stability at the Bank of England has warned.
Sir Jon Cunliffe, who held one of the most senior roles at the Bank until 2023, has said the UK is at risk of a rapid correction in AI stocks.
He told the BBC Today programme that there were several risks that could take the air out of AI stocks and high profit expectations.
Sir Jon said: “One is whether, for policy reasons, governments or AI companies themselves just put a brake on the speed of development. Some is whether the infrastructure can just be delivered at the scale at which it’s being planned. But there’s also the question of the future profitability of the services.
“We’ve seen technological revolutions in the past: canals, railways, electrification, which have been really beneficial to the economy. But they were also accompanied by investment booms, and not all of the investment was justified by the future returns. That’s the possibility here.”
Sir Jon added: “A correction, if it happens over time is what markets are supposed to do, but a fast correction could have widespread implications.”
07:44am
Good morning
Thanks for joining me. Tech stocks have fallen sharply after Elon Musk and the boss of OpenAI joined calls for the slowdown of AI development. Here is what you need to know.
5 things to start your day
1) Hundreds of hotels, pubs and restaurants urge Burnham to slash VAT| Prime Minister challenged to honour pledge to cut levy to 10pc and save thousands of jobs
2) Trump rejects Silicon Valley’s calls for AI slowdown | US president says ‘very negative forces’ are overstating the risks
3) Labour’s wealth raid ‘kills off ultra-luxury homes in London’ | A 120-home project in St John’s Wood is likely to be the last residence of its kind
4) Factories slash hiring ahead of Budget| Manufacturing vacancies fall by 6.2pc, despite rising business confidence
5) David Lloyd waters down net zero targets | Gym chain has spent millions on solar panels and heat pumps in effort to cut emissions
What happened overnight
Asian stocks fell as traders assessed fresh safety concerns over the pace of AI development.
South Korea’s Kospi lost 3.3pc to 6,679.23 and Japan’s Nikkei 225 index slid 0.6pc to 63,633.57. Hong Kong’s Hang Seng rose 0.3pc to 24,886.81.
The tech-heavy Nasdaq index dropped 1.2pc in Asian trading hours, while S&P 500 futures shed 0.5pc. Those linked to The Dow Jones Industrial Average were down 0.1pc.
It came despite efforts from Donald Trump to downplay concerns about AI technology, saying on Sunday that “very negative forces” were overstating the risks.
On Saturday, Anthropic chief executive Dario Amodei called for tech companies to slow down their advancement and for more work to be done on AI safety. His comments were backed by Sam Altman, the OpenAI boss, Sir Demis Hassabis, the chairman of Google DeepMind, and Elon Musk.
Oil rose after Saudi Arabia was forced to close a crucial oil pipeline after drone attacks from Iraq on Friday. Brent crude was up 2.8pc to $107.5 a barrel, while West Texas Intermediate rose 2.22pc to $102.3 a barrel.
The US’s 10-year Treasury yields edged closer to the crucial 5pc level on Friday amid the prolonged bond sell-off, while two-year yields climbed to 4.66pc.