From Fortune · Eva Roytburg · · 1m 30s
Wall Street just priced in an AI slowdown
Chipmakers sank while the hyperscalers rose, and the split says a lot about how investors think an AI pause would play out.
In brief
Chipmakers sank while the hyperscalers rose, and the split says a lot about how investors think an AI pause would play out. If the frontier race slows, the companies selling picks and shovels bleed first, while the buyers can stop spending and bank the cash. Originally reported by Fortune.
The AI risk debate hit stocks
Monday was the day Wall Street finally traded on the existential-risk argument. The reaction was not a blanket sell-off, and that is the interesting part.
“New York and San Francisco finally connected on Monday”
Chipmakers took the hit
Nvidia fell more than 3%. Intel, AMD, and Marvell dropped 5% to 6%, pulling the Philadelphia Semiconductor Index down almost 6%. Neoclouds sank too.
The buyers went up
Alphabet rose almost 2%, Microsoft added 1.6%, Meta gained about 1.4%. Amazon slipped 1.6% but held far better than the chip names.
What sparked it
On Saturday, Anthropic CEO Dario Amodei called for stronger safety measures and a slowdown in model development after alarming demos of models' cyber abilities. Sam Altman and others backed him.
Picks and shovels lose first
D.A. Davidson's Gil Luria says a slowdown guts infrastructure sellers like Nvidia and CoreWeave. Hyperscalers would just stop building and harvest what they already own, sending cash flow up as capex falls.
“They'll just all stop building data centers and just digest what they have”
Maybe nobody is slowing
Luria notes no lab has announced an actual training moratorium. Dan Ives adds that China is not pausing, with Z.AI raising $5 billion over the weekend. Oil above $108 and a 5% 10-year yield did the rest.
“Until they say that, they're not actually slowing down”
At a glance
If the frontier race slows, the companies selling picks and shovels bleed first, while the buyers can stop spending and bank the cash.
