Introduction: AI-linked Asian stocks slump after slowdown call<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
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.<\/p>\n
Shares in AI-linked companies in Asia dropped when trading began today, dragging South Korea\u2019s KOSPI index down by 3.7%. Chipmaker SK Hynix has slumped by 5.75%<\/p>\n
SoftBank, a major AI invester, fell by as much as 13% in Tokyo after OpenAI\u2019s chief executive officer Sam Altman said that the ChatGPT-maker won\u2019t go public this year (SoftBank owns a stake in OpenAI).<\/p>\n
Taipei\u2019s Taiwan Semiconductor Manufacturing Company dropped by 1.2%.<\/p>\n
Traders\u2019 optimism about AI has taken a hit after the CEO of Anthropic, Dario Amodei, appealed for the AI industry to \u201cslow down\u201d \u2013 a call which was quickly backed by both Altman and Elon Musk.<\/p>\n
Amodei said \u201cbuilding [AI] too fast is reckless\u201d, and warned that a swarm of AI agents could cause hundreds of billions of dollars of damage by \u201ctaking over the entire internet\u201d in future.<\/p>\n
Although Amodie\u2019s claims have been disputed by some AI experts<\/a>, 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.<\/p>\n Ipek Ozkardeskaya, senior analyst at Swissquote, says there is a \u201csour mood in the markets this morning\u201d, explaining:<\/p>\n double quotation markSo 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 \u2013 hence borrowing costs \u2013 are expected to rise.<\/p>\n What\u2019s interesting is that the slowdown may come not because Big Tech is out of cash, or because investors won\u2019t play along. It comes from the actual people who develop these models.<\/p>\n The agenda<\/p>\n 11.30am BST: India\u2019s inflation report for August<\/p>\n 1.30pm BST: Canada\u2019s inflation report for August<\/p>\n 4.15pm BST: ECB president Christine Lagarde gives speech in Vienna, Austria<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.09 EDT<\/p>\n Key events<\/p>\n Full story: AI-linked stocks fall after tech bosses call for slowdown in \u2018reckless\u2019 development<\/p>\n Here\u2019s our news story on the drop in AI company share prices today:<\/p>\n Share<\/a>AirBaltic files for Chapter 11 bankruptcy protection to cut debts<\/p>\n The high price of oil has pushed Latvian airline airBaltic to seek bankrupty protection.<\/p>\n AirBaltic filed for Chapter 11 bankruptcy protection in New York this morning, as it tries to restructure its hefty debts.<\/p>\n AirBaltic, which is majority owned by the Latvian government, said it was using Chapter 11 to restructure its finances and raise capital while continuing day-to-day operations.<\/p>\n The process will not affect passengers and operations will continue as normal, airBaltic says.<\/p>\n Andrejs Martinovs, chairman of the supervisory board of airBaltic, says the airline hopes to create a \u201cfinancially stronger airBaltic\u201d with lower debts, explaining:<\/p>\n double quotation mark\u201cWe have carefully assessed the restructuring options available to the company, with one priority in focus \u2013 to give airBaltic the best possible basis to continue operating and to build a sustainable financial structure.<\/p>\n Under court supervision and with protection from creditor claims, this process provides a clear framework and timetable for reaching agreements with creditors, including aircraft lessors and other stakeholders. At the same time, it allows the company to continue operating<\/p>\n Share<\/a><\/p>\n Oil is rising too \u2013 with Brent crude up 2.8% to $107.50 this morning.<\/p>\n Traders are anticipating further disruption to energy supplies from the Gulf, after Saudi Arabia\u2019s major pipeline to the Red Sea (avoiding the strait of Hormuz) was attacked by drones last week.<\/p>\n Share<\/a>UK gas prices highest in close to four years<\/p>\n There\u2019s also turbulence in the energy markets again this morning, as the Middle East conflict continues to rage.<\/p>\n European gas prices have jumped by over 5% in early trading, pushing the month-ahead UK gas contract up to 209.50p per therm, its highest since late December 2022.<\/p>\n Share<\/a>ASML shares hit by AI slowdown call<\/p>\n Dutch tech giant ASML\u2019s shares have slumped by around 4.5% in early trading, as traders react to last weekend\u2019s calls for an AI slowdown.<\/p>\n ASML is the world\u2019s leading supplier of photolithography systems \u2013 high-tech machines which use light to print microscopic circuit patterns onto silicon wafers \u2013 to the semiconductor industry.<\/p>\n Its machines have been hot property as chipmakers try to meet the insatiable appetite for high-powered chips to run data centres.<\/p>\n Share<\/a>AI victims’ share prices rise<\/p>\n Companies threatened by the march of AI are seeing their share prices rise this morning!<\/p>\n RELX, the analytics group, are up 4.2% and leading the FTSE 100 risers. Earlier this year its shares tumbled after the Claude chatbot added new data and automation tools<\/a>.<\/p>\n Advertising group WPP has gained 3.1% this morning.<\/p>\n Share<\/a><\/p>\n Technology stocks are falling in London at the start of the new trading week.<\/p>\n Polar Capital Technology, the FTSE<\/a> 100-listed investment trust, has dropped by 3%.<\/p>\n Shares in Raspberry Pi, which makes low-cost computers which can run AI models, have fallen by 5.3%.<\/p>\n Share<\/a>IG: Tech wobbles as AI enthusiasm wanes<\/p>\n The tech-focused Nasdaq stock index is forecast to drop by more than 1% when trading begins in New York this afternoon.<\/p>\n Chris Beauchamp, chief market analyst at investing and trading platform IG, explains:<\/p>\n double quotation mark\u201cSuddenly the headlong rush to develop AI seems to have stopped in its tracks.<\/p>\n With both Altman and Amodei warning of the risks of uncontrolled development, the mood music appears to be shifting. For markets this raises the possibility of a slowdown in data centre rollout, or a throttling of demand for chips, both of which would undermine the foundations of the investment thesis in many big-name stocks. The news has sent a chill through markets in Asia and Nasdaq futures are lower too.<\/p>\n This seems very much a knee-jerk reaction – AI use is still expected to explode, driving data centre construction even if the wilder experiments are rolled back, but it has hit a market already on edge ahead of the Fed decision this week.\u201d<\/p>\n Share<\/a><\/p>\n The Financial Times are reporting that Anthropic has told its backers it will be profitable this quarter.<\/p>\n This might allay investor concerns about the aggressive cash burn of frontier AI companies ahead of Anthropic\u2019s blockbuster initial public offering.<\/p>\n The FT say<\/a>:<\/p>\n double quotation markThe company has told a small group of shareholders that its adjusted operating income will be positive for the second consecutive quarter, according to multiple people with knowledge of the matter. The measure strips out costs including stock-based compensation.<\/p>\n Anthropic\u2019s gross margins are above 80 per cent before accounting for revenue shared with distribution partners, including Amazon, and the cost of training its models, according to two of the people.<\/p>\n [Mind you, those two costs are rather significant\u2026]<\/p>\n Share<\/a><\/p>\n Updated at\u00a003.03 EDT<\/p>\n It is \u201cself-serving\u201d for AI companies such as OpenAI and Anthropic to talk of slowing things down, argues investor Michael Burry.<\/p>\n Posting on X, Burry (famous from The Big Short<\/a>) suggests four reasons why Altman and Amodie might benefit from talking about a jab on the brakes:<\/p>\n LLMs are not AI and won\u2019t be AGI. There is nothing AI to slow down.<\/p>\n Competition is coming up fast, slowing benefits incumbents.<\/p>\n IPOs need hype & puffery; \u201cwe are so awesome it could become dangerous\u201d is hype & puffery<\/p>\n Cover for real uncontrollable slowing growth as IPOs look to be pushed out<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.38 EDT<\/p>\n For markets, the key question is whether this is the first sign that the extraordinary AI investment cycle might eventually moderate, says strategist Jim Reid of Deutsche Bank.<\/p>\n He feels this is unlikely, though, telling clients:<\/p>\n double quotation markThe competitive race between companies and countries remains intense, and it\u2019s difficult to imagine firms voluntarily stepping back while rivals continue to push ahead. It is hard to see China standing still. Indeed, that\u2019s something President Trump said yesterday in response to the weekend news. He didn\u2019t seem in favour of any kind of pause.<\/p>\n I suppose another way of looking at it is that if leading executives are openly discussing the risks of increasingly powerful systems, it could be them trying to get across how transformative they believe the technology may become and help advertise the power of their product. So rather than signalling less spending, it could simply be that a greater share of AI investment is directed towards safety, monitoring and governance alongside the continued build-out of compute infrastructure. The debate may therefore alter the composition of AI capex more than its overall scale.<\/p>\n Share<\/a>Will AI CEOs actually slow down?<\/p>\n Nick Robins-Early<\/p>\n Dario Amodei\u2019s pacing proposal has drawn heavy skepticism from critics<\/a> and researchers who allege that AI firms are attempting to preempt more stringent government regulation and retain the status quo of power within the industry.<\/p>\n Rahm Emanuel, former congressman and chief of staff to Barack Obama, posted online:<\/p>\n double quotation mark\u201cI can tell you when the last time a CEO or an industry at large asked to be regulated: never. That\u2019s what makes Dario\u2019s letter so striking \u2013 it\u2019s an admission that we\u2019re driving down a dark, winding road on wet pavement with the headlights off.<\/p>\n And where\u2019s President Trump? Looks like he nodded off again.\u201d<\/p>\n More here:<\/p>\n Trump, on a visit to his golf course in Ireland, played down the warnings and said \u201cvery negative forces\u201d were \u201cbringing up things that won\u2019t happen\u201d.<\/p>\n Share<\/a><\/p>\n You can read Dario Amodei\u2019s call for an AI slowdown here: We Must Pace the Frontier<\/a>.<\/p>\n In it, Amodie lays out a three-step plan<\/p>\n building AI \u201cat a balanced rate that aims to ensure its safety\u201d by \u201censuring companies take adequate time to align and safeguard their models, and for third party evaluators to confirm this\u201d.<\/p>\n industry-wide coordination to guarantee common safety standards and restrict \u201cunchecked AI progress\u201d.<\/p>\n global coordination, between democratic states and \u201cauthoritarian governments\u201d<\/p>\n Amodie writes:<\/p>\n double quotation mark\u201cThe steps do not need to be taken strictly in order, and some of them may be much harder to achieve than others, but I\u2019ve found them to be a useful framework in thinking about what needs to be accomplished.\u201d<\/p>\n Share<\/a>OpenAI Pre IPO market-cap contract falls<\/p>\n The anticipated value of AI developer OpenAI has dropped over the weekend, following the call for a slowdown in the industry.<\/p>\n OpenAI is currently a private company, but broker IG are running a contract where traders can bet on the company\u2019s value.<\/p>\n Tony Sycamore, market analyst at IG, reports:<\/p>\n double quotation markIG\u2019s 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 \u2014 a pullback of about $70 billion from that high.<\/p>\n [Astra was released to approved users on 3 September].<\/p>\n 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 \u201cill-advised.\u201d<\/p>\n Share<\/a>Introduction: AI-linked Asian stocks slump after slowdown call<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n 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.<\/p>\n Shares in AI-linked companies in Asia dropped when trading began today, dragging South Korea\u2019s KOSPI index down by 3.7%. Chipmaker SK Hynix has slumped by 5.75%<\/p>\n SoftBank, a major AI invester, fell by as much as 13% in Tokyo after OpenAI\u2019s chief executive officer Sam Altman said that the ChatGPT-maker won\u2019t go public this year (SoftBank owns a stake in OpenAI).<\/p>\n Taipei\u2019s Taiwan Semiconductor Manufacturing Company dropped by 1.2%.<\/p>\n Traders\u2019 optimism about AI has taken a hit after the CEO of Anthropic, Dario Amodei, appealed for the AI industry to \u201cslow down\u201d \u2013 a call which was quickly backed by both Altman and Elon Musk.<\/p>\n Amodei said \u201cbuilding [AI] too fast is reckless\u201d, and warned that a swarm of AI agents could cause hundreds of billions of dollars of damage by \u201ctaking over the entire internet\u201d in future.<\/p>\n