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5m agoOpenAI Pre IPO market-cap contract falls
6m agoIntroduction: AI-linked Asian stocks slump after slowdown call
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Investors are reassessing the value of companies driving the artificial intelligence revolution after several leading AI figures called for a slowdown in development for safety reasons.
Shares in AI-linked companies in Asia dropped when trading began today, dragging South Korea’s KOSPI index down by 3.7%. Chipmaker SK Hynix has slumped by 5.75%
SoftBank, a major AI invester, fell by as much as 13% in Tokyo after OpenAI’s chief executive officer Sam Altman said that the ChatGPT-maker won’t go public this year (SoftBank owns a stake in OpenAI).
Taipei’s Taiwan Semiconductor Manufacturing Company dropped by 1.2%.
Traders’ optimism about AI has taken a hit after the CEO of Anthropic, Dario Amodei, appealed for the AI industry to “slow down” – a call which was quickly backed by both Altman and Elon Musk.
Amodei said “building [AI] too fast is reckless”, and warned that a swarm of AI agents could cause hundreds of billions of dollars of damage by “taking over the entire internet” in future.
Although Amodie’s claims have been disputed by some AI experts, investors are pricing in a slowdown to AI development which would make it harder for the industry to pay for its rapid rollout of data centres.
Ipek Ozkardeskaya, senior analyst at Swissquote, says there is a “sour mood in the markets this morning”, explaining:
So if the AI race slows materially, the key question becomes: who pays for all that infrastructure? The leases, debt and power commitments remain even if expected compute demand and revenue growth slow. And that could bring credit risk increasingly into the AI story, particularly for highly leveraged data-centre operators and lenders exposed to projects built on aggressive assumptions about future AI demand, at a time when interest rates – hence borrowing costs – are expected to rise. What’s interesting is that the slowdown may come not because Big Tech is out of cash, or because investors won’t play along. It comes from the actual people who develop these models.
So if the AI race slows materially, the key question becomes: who pays for all that infrastructure? The leases, debt and power commitments remain even if expected compute demand and revenue growth slow. And that could bring credit risk increasingly into the AI story, particularly for highly leveraged data-centre operators and lenders exposed to projects built on aggressive assumptions about future AI demand, at a time when interest rates – hence borrowing costs – are expected to rise.
What’s interesting is that the slowdown may come not because Big Tech is out of cash, or because investors won’t play along. It comes from the actual people who develop these models.
The agenda
11.30am BST: India’s inflation report for August
1.30pm BST: Canada’s inflation report for August
4.15pm BST: ECB president Christine Lagarde gives speech in Vienna, Austria
The anticipated value of AI developer OpenAI has dropped over the weekend, following the call for a slowdown in the industry.
OpenAI is currently a private company, but broker IG are running a contract where traders can bet on the company’s value.
Tony Sycamore, market analyst at IG, reports:
IG’s OpenAI Pre IPO market-cap contract, which had rallied from about $1.38 trillion to $1.64 trillion after the release of Astra, has fallen back to $1.57 trillion on the news — a pullback of about $70 billion from that high.
[Astra was released to approved users on 3 September].
That IPO might not come as soon as expected, either. In an interview published over the weekend, Sam Altman said a stock market float this year would be “ill-advised.”
