US technology shares declined sharply on Tuesday following calls from leading artificial intelligence (AI) companies to slow the pace of AI development amid growing safety concerns. The Nasdaq 100 index fell 1 percent, with memory and semiconductor stocks experiencing some of the most significant losses.

The sell-off came after Anthropic’s CEO, Dario Amodei, urged fellow AI developers to moderate the speed of advancement to address potential risks associated with the technology. Investors reacted to the possibility that increased caution around AI safety could reduce capital expenditures in the sector, potentially tempering the rapid growth and earnings that have underpinned the recent surge in tech valuations.

Among the hardest-hit were major chipmakers, with Sandisk, Intel, and Micron each dropping more than 5 percent. Nvidia, the world’s largest company by market value and a key player in AI hardware, declined by 3.1 percent. Emmanuel Cau, head of European equities strategy at Barclays, noted that concerns about slower AI development raised questions about the implications for global economic growth and corporate profits.

The tech sector also faced pressure from rising interest rates and energy prices. Brent crude oil climbed to $109.80 a barrel, contributing to elevated government bond yields. The yield on the 10-year US Treasury note surpassed 5 percent for the first time since 2023, a sharp increase from just under 4 percent prior to the outbreak of the conflict in Iran. This rise in borrowing costs is particularly challenging for technology companies, which often depend on long-term revenue growth projections and debt financing for AI investments.

Expectations for interest rate hikes have intensified after recent US inflation data slightly exceeded forecasts, prompting markets to price in three quarter-point increases from the Federal Reserve by March 2027.

Tech shares in Asia and Europe also declined on the drift in investor sentiment. South Korea’s Kospi index, heavily weighted toward technology firms, ended the day down 3.3 percent. Europe’s Stoxx 600 technology sub-index fell 2.1 percent, with semiconductor equipment manufacturer ASML down 6.1 percent.

The heightened scrutiny of AI emerged following the resignation of an Anthropic researcher who criticized the company and OpenAI, accusing them of recklessly advancing AI without adequate safeguards. This internal dissent amplified market concerns about the pace and safety of AI development.

Japan’s SoftBank, which owns roughly 13 percent of OpenAI, saw its stock plunge 10.7 percent amid fears that the sector’s risk profile is increasing. The turbulence arrives as the industry approaches the anticipated initial public offering (IPO) of Anthropic, which could face delays. OpenAI is also reportedly postponing its potential public listing until at least next year.

In contrast to the caution expressed in the West, China’s foreign ministry dismissed the warnings as exaggerations, stating that AI development remains “a force for good” and an important driver of progress.

The intersection of rising safety concerns, monetary tightening, and geopolitical uncertainties is testing the resilience of the AI-driven rally that has lifted global technology markets since the release of OpenAI’s ChatGPT in late 2022.