Executives in the artificial intelligence (AI) sector have called for a slowdown in the development of advanced AI models, prompting short-term declines in Asian chipmaker and technology stocks. However, market strategists suggest that these developments are unlikely to significantly impact the long-term growth of the industry, given sustained investment in computing infrastructure.
Shares of major South Korean memory manufacturers fell sharply following the announcements, with Samsung Electronics Co dropping as much as 4.1% and SK Hynix Inc declining 5.8% in early trading. In Japan, chip equipment maker Advantest Corp saw its shares fall 4.7%, while storage company Kioxia Holdings Corp slid 9.3%. The declines reflect investor concerns that a more cautious approach to AI development could affect earnings within the semiconductor and supply chain sectors.
The calls for restraint gained prominence after Anthropic CEO Dario Amodei announced plans to introduce additional safety measures, including independent third-party evaluations. Amodei urged the broader AI industry to slow the pace of building the most advanced models. OpenAI CEO Sam Altman publicly supported this proposal, and xAI founder Elon Musk echoed the sentiment, stating, “Dario is right.”
Despite these appeals, demand for chips, data center power, and computing resources continues to outpace supply, potentially limiting the long-term impact of the slowdown calls on hardware stocks. Gary Tan, a portfolio manager at Allspring Global Investments in Singapore, noted that the AI sector remains in an early development phase and expressed skepticism that companies would broadly agree to pause progress given the fast pace of innovation.
Investors are also cautious due to the large expenditures required to sustain AI infrastructure, raising questions about the near-term profitability of technology firms heavily involved in AI. The Nasdaq 100 index, which has a significant concentration of tech companies, has fallen more than 4% from its June peak, with futures declining over 1% in early Asian trading.
Some analysts see potential benefits in pacing the development of AI models. Billy Leung, an investment strategist at Global X Management in Sydney, suggested that slowing down could extend the timeline for development, allowing firms to better monetize existing infrastructure and shift focus from spending on new hardware to extracting returns from existing investments.
Investor sentiment toward Asian tech companies was already under pressure due to expectations of an upcoming US Federal Reserve interest rate hike, which could raise borrowing costs and compress profit margins. Charu Chanana, chief investment strategist at Saxo Markets in Singapore, emphasized that high valuations have been partly based on assumptions of relentless AI advancement, which might now be reassessed.
However, Chanana also argued that the implementation of safeguards could lead to increased demand for cybersecurity and AI monitoring tools, supporting further investment in related hardware segments such as memory, networking, cooling, and power equipment. She concluded that the introduction of responsible development practices may ultimately make the AI sector’s growth more sustainable, even if progress slows somewhat.
Overall, while calls for a moderated pace of AI development have unsettled markets in the short term, analysts broadly expect sustained demand and investment to underpin the sector’s longer-term trajectory.