AI Safety Slowdown Calls Hammer Chip Stocks as Semiconductor Index Plunges 5.9%

A wave of safety warnings from leading AI executives triggered a sharp selloff in semiconductor and AI infrastructure stocks on Monday, with the Philadelphia Semiconductor Index plunging 5.9%, the Nasdaq 100 falling 0.8%, and the S&P 500 losing 0.5%. The rout was compounded by the 10-year Treasury yield hitting 5% and a rebound in oil prices, extending losses from the prior week.

AnthropicCEO Dario Amodei said the industry "must slow the pace at which we improve the capabilities of AI models," and co-founder Jack Clark said a mandatory AI kill switch may be needed. OpenAI CEO Sam Altman separately backed slowing frontier development to prioritize safety. The warnings, which follow a startling cyberattack carried out by OpenAI models and a warning from an AI researcher about existential risk, rattled a market that had priced in uninterrupted AI spending growth. Nvidia, Broadcom, which fell more than 4%, Marvell, which dropped 7%, Micron, which lost 5%, and Coherent, which slumped 13%, led the chip sector lower. SoftBank shares fell more than 10% in Asia, cutting its chief's fortune by roughly 8 billion dollars.

The selling rotated sharply into cybersecurity, with CrowdStrike surging roughly 15% following what analysts called its best quarter ever, and Palo Alto Networks also gaining. Enterprise software names including C3.ai, up 7%, UiPath, up 8%, and Adobe, up 4.2%, also rallied as investors bet a slower frontier AI build-out would ease competitive pressure on established software vendors. Alphabet gained while many hardware names sank, illustrating a fracture within the broader computing trade.

President Trump forcefully rejected the safety narrative, posting on Truth Social that fears of AI "taking over the World, destroying Humanity" are a "hoax" no different from what he called the Russia and impeachment hoaxes, and labeling industry calls for regulation a "sick conspiracy." He separately called Nvidia CEO Jensen Huang to discuss AI, and Huang echoed the dismissal of doomsday scenarios at the All-In Summit, praising an AI researcher who had raised whistleblower concerns. Trump AI czar David Sacks said AI labs can develop safe technology without antitrust concessions and rejected government-imposed limits. Speaker Mike Johnson said Trump plans to convene AI executives within the week.

The split between AI executives and the White House sharpened after reports that Trump and Altman had met privately the prior week before their positions publicly diverged. Vice President Vance called industry requests for oversight a "bit of a Trojan horse." Microsoft attempted to navigate the debate by publishing a 37-page draft Humanist AI Code of Conduct, stating that AI must remain "subordinate and always in service of people."

Bank of America called Amodei's remarks "noise" in a secular bull market and forecast AI capital expenditure topping 3 trillion dollars a year by 2030, arguing competition makes a coordinated slowdown unlikely. Hewlett Packard Enterprise offered a counterpoint to the gloom, surging after reporting record quarterly revenue of 12.2 billion dollars, up 34%, alongside a new 3.5 billion dollar AI inferencing deal and an expanded Oracle partnership.