AI Giants Call for Slowing Development but 'No Need to Worry'? Strategists Say It’s 'Unlikely,' Explaining the Reasons Behind

Whether the artificial intelligence (AI) industry has reached a point where development needs to slow down is becoming a focal point for Wall Street. Tech leaders such as Anthropic CEO Dario Amodei, OpenAI CEO Sam Altman, and Tesla (TSLA-US) CEO Elon Musk have recently called for a slower pace in AI development. On Monday (the 15th), investors appeared to begin reevaluating these risks.

According to Business Insider, AI-related stocks were sold off that day, as investors started considering the potential impact on the broader industry and capital expenditure (capex) boom if cutting-edge AI labs truly slowed their progress.

The Philadelphia Semiconductor Index closed down 5.86%, while the Nasdaq 100 Index—weighted heavily toward tech stocks—briefly dropped over 1.6% before closing 0.82% lower.

This cautious messaging from AI industry leaders comes amid a warning last week from former Anthropic researcher Jacob Coxon, who stated that AI could lead to human extinction within the next decade.

The current challenge facing markets is how much these warnings might affect the ongoing AI investment frenzy. Over the past few years, rapid growth in AI capital expenditures (capex) has been a major driver of market momentum. Even though investors have recently begun questioning the return on investment (ROI) of such massive spending, a sudden sharp reduction in related expenditures could significantly alter the economic logic underpinning AI-driven trades.

Nonetheless, Wall Street professionals generally remain skeptical that AI companies will genuinely scale back development and spending.

U.S. stock markets gradually recovered some losses during Monday’s session, as oil prices and bond yields retreated from intraday highs. This suggests that the day’s market weakness wasn’t solely due to AI-related concerns, but also influenced by broader macroeconomic factors that have pressured equities in recent weeks.

Marta Norton, chief investment strategist at Empower, said on Monday that it’s “unlikely” AI firms will truly slow down significantly. She explained that any company choosing to decelerate would risk being overtaken by competitors.

She suggested that recent statements by AI executives may carry a “public relations” element: “What they say and what they actually do may not fully align.” Industry competition, she added, remains a powerful force driving continued AI advancement.

Norton also noted that governments worldwide place high importance on AI development, forming another key driver pushing the sector forward.

Gene Munster, managing partner and co-founder of Deepwater Asset Management, likewise believes large-scale retreat by AI companies is nearly impossible.

He wrote on social platform X that one reason is the “prisoner’s dilemma” effect: as long as one company maintains its development pace, others that slow down would face a clear disadvantage.

Another factor, Munster said, is U.S.-China technological competition. He views this rivalry as real and believes the U.S. must at least match China’s pace of development.

Bank of America analyst Arya Vivek described these recent events as mere “noise” compared to long-term AI development trends. In a report to clients, he projected that AI capex could grow to over $3 trillion by the end of the century—roughly triple its current size.

Arya emphasized that AI has become a strategic priority for the U.S. government, tied to competing with China for technological leadership, maintaining productivity and GDP growth, and securing American dominance in the tech sector.

Although most market participants don’t expect an immediate sharp cooldown in AI development, Nationwide’s chief market strategist Mark Hackett warned that the real risk lies in eroding investor confidence in AI.

He argued that even if companies don’t materially slow AI development, a series of high-profile warnings could amplify market volatility.

Given that AI has become a key driver of S&P 500 gains, any shift in investor sentiment toward AI-leading firms, data centers, or related financing could trigger far more severe market swings than anticipated.

Meanwhile, David Stubbs, chief investment strategist at AlphaCore Wealth Advisory, noted that Monday’s equity sell-off may have also been influenced by other factors, including persistently rising yields on long-dated U.S. Treasury bonds and surging oil prices. Brent crude briefly approached $110 per barrel before paring gains.

In this context, Norton advised investors to mitigate the potential volatility of AI-related trades through portfolio diversification. She pointed out that healthcare stocks and European equities have relatively limited exposure to AI themes and could serve as effective diversifiers.

Stubbs added that industrial metals and gold are also viable options for risk diversification, given the strong ongoing demand for physical assets.