Every once in a while, the market hands attentive investors a gift amid the chaos. That gift took shape when tech heavyweights Anthropic CEO Dario Amodei, OpenAI CEO Sam Altman, and Elon Musk warned of the need to slow down artificial intelligence development due to safety concerns.
This news caused many AI stocks to plunge, as investors worry that slowing AI development will lead to less capital flowing into companies addressing key parts of the bottleneck. These same fears are extremely overblown, and cautious words from a few tech CEOs aren't enough to slow down momentum.
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Talks about slowing down AI development aren't as altruistic as they appear
OpenAI, Anthropic, and Space Exploration Technologies (SPCX -3.15%) are all burning through money. They are growing rapidly, but these same companies also incur high net losses each quarter.
These companies, from a financial standpoint, are in an unfavorable position if the AI build-out continues to accelerate, driven by rising capital expenditures. If profitable hyperscalers like Meta Platforms (META +0.70%) and Microsoft (MSFT -1.64%) continue to accelerate, it will force other companies to play catch-up, even if they have to go deeper into debt or dilute shareholders.
The profitable tech giants bring in billions of dollars in pure profits every month. If Mark Zuckerberg (Meta), Satya Nadella (Microsoft), or Sundar Pichai (Alphabet) called for a slowdown in AI development, that would be a lot different.
The calls for slower AI development may appear altruistic, but there is a financial incentive for OpenAI, Anthropic, and SpaceX to temporarily slow down development.
It's similar to how Meta Platforms must limit teens to two hours of Facebook and Instagram usage each day. In an attempt to earn some good PR, Meta Platforms offered to cut down the limit to one hour per day if YouTube and TikTok did the same. The public directive of "join[ing] us in supporting teams" is designed to protect market share from social media companies that are not required to restrict time limits on teen users.
NASDAQ: MSFT
Key Data Points
Key voices call for more AI expansion and point to current gains
Talk of an AI slowdown has reached many investors, but tech CEOs have also commented on it. However, any AI development slowdown requirements would have to be passed by the Trump administration. That looks like long odds.
President Trump has fired off multiple social media posts calling AI concerns a hoax, and he also said that AI and data centers "will be the greatest economic development engine in history." Trump seems unlikely to slow down AI development when he believes it will be "bigger than oil, gold, diamonds, or even the internet."
Key players in the AI bottleneck have also spoken out, explaining how a slowdown in AI development would not derail their businesses.
Broadcom (AVGO -1.58%) CEO Hock Tan told CNBC that the company stands by its long-term revenue targets, citing "durable" long-term demand.
Iren (IREN -3.68%) CEO Daniel Roberts said in an X thread that current discussions about slowing down AI development do not alter the long-term AI data center thesis.
"Even if models never improved from here, just rolling out what they can already do would take more compute than the world can build for years. The debate about how fast AI should be allowed to improve is a fair one to have. It's about future generations of models," Roberts said.
Nothing has changed except stock prices
The President views AI as the most important technology right now and has no interest in slowing down AI development. If anything, he wants to speed it up. Even in a hypothetical scenario where development slows slightly, chipmakers, AI data center builders, and other leaders have expressed no concern.
They have all said in different ways that business will continue as usual. The "sky is falling" narrative will quickly crumble as the warning fades into the news cycle.
In the meantime, many AI stocks endured hard-to-justify corrections. Slowdowns in AI development do not affect current businesses, and with that scenario unlikely to play out, companies in the AI bottleneck are well positioned to report higher revenue growth rates in the years ahead.
