Trump dismisses safety warnings as ‘a hoax’ benefiting China
Four major U.S. artificial intelligence companies publicly called over the weekend for a slowdown in AI development, warning the technology could end humanity. Wall Street’s response on Monday followed a different logic: investors sold shares of chip makers supplying AI hardware and bought more of the AI-hyperscaler companies whose data centers use those chips.
Shares of Microsoft, Alphabet and Meta Platforms — three of the largest AI-hyperscaler companies, so named for the sprawling data centers that power AI services — each gained 2% or more on Monday. The major U.S. stock indexes, meanwhile, posted modest declines: the S&P 500 fell 0.5%, the tech-heavy Nasdaq Composite slipped 0.6%, and the Dow Jones Industrial Average ended down 0.3%, or 152 points.
In favoring hyperscalers over chip stocks, the market appeared to conclude that Microsoft and its peers would still rank among the world’s most-profitable companies even if AI investments slow. Chip makers such as Micron Technology and Intel, by contrast, depend on a steady stream of new orders to sustain their growth stories.
The PHLX Semiconductor Index dropped 5.9%, its worst day since July. Shares of Corning, Teradyne and Coherent — all AI-related hardware suppliers — were the S&P 500’s worst performers, each down at least 12%. Cybersecurity stocks led the index higher: CrowdStrike was the top performer, gaining 14%; Palo Alto Networks, Fortinet and ServiceNow also posted outsize gains. Software companies whose shares had been buffeted this year by concerns that new AI tools would render them obsolete were also among the S&P 500’s best performers.
The weekend’s warnings came from Anthropic’s Dario Amodei, OpenAI’s Sam Altman, Elon Musk of xAI and Demis Hassabis of Google’s DeepMind. Amodei suggested a slowdown as concerns mounted around recursive self-improvement, the theoretical ability of AI to endlessly optimize itself. Altman and Musk, often contentious public rivals, soon affirmed the call.
Researchers are particularly alarmed at AI’s threat to cybersecurity. That concern was underscored by recent incidents in which OpenAI’s AI agents separately hacked into the platforms Hugging Face and RubyGems, and by warnings from a now-departed Anthropic researcher and several current employees that AI systems could end humanity as early as within the decade.
President Trump rejected the calls for restraint. “There is a SICK conspiracy going on against AI and Data Centers, and the only one that is happy about it is China,” Trump wrote on Truth Social on Monday morning.
Later in the afternoon, Trump telephoned Nvidia Chief Executive Jensen Huang while he was on stage at a Los Angeles tech conference. “The robots will not be taking over. The AI will not be taking over,” Trump said on speakerphone, according to a video of the exchange shared with The Wall Street Journal by investor Ben Pouladian. “It’s all a hoax.”
“That’s right, we’re not going to let that happen, sir,” Huang responded.
The moves underscored the challenge for investors and analysts in identifying how the latest advancements, setbacks and regulatory developments in AI will affect swaths of markets and the economy. By some measures, individual stocks in the U.S. have been less correlated than ever this year, which many chalk up to the race to identify AI winners and losers across industries.
One thing most agree on: the AI investment boom isn’t going to end soon. That assumption has made it easier for many to take the weekend’s warnings as a positive. “I think it’s an inflection point that likely gets us to a better place for safety at the end of the day while causing volatility in the interim,” said Art Hogan, chief market strategist at B. Riley Wealth. “And I certainly don’t think the frontier developers are willing to say ‘the hundreds of billions we’ve invested in this was bad and we’re walking away.’”
Still, an ugly day for chip stocks likely has more to do with investors taking profits after substantial gains than a fundamental reset in their outlook. The PHLX index remains up 84% over the past year. “Some of these semiconductor names have tripled this year,” Hogan added. “To the extent that you’re looking for a reason to get off the train for a moment or at least right-size your position, you got a good one over the weekend.”
“What really happened? Surely something big enough to spook Dario, Sam and Elon into rare agreement,” said Giuseppe Sette, co-founder of Reflexivity, an AI investment analytics firm. “With China in the race, though, we don’t expect any major slowdown. And as for any retracement in AI stocks, that is simply a buying opportunity.”
Goldman Sachs tech analyst Jim Schneider said at an investor conference last week that the AI trade had shifted in the first half of the year, with investors chasing bottlenecks in the supply chain — “whether that was DRAM or memory stocks or optical elements.” Schneider added: “Some of these stocks have pulled back. Now the question is, will the constraint trade continue to work in the back half of the year? Or will we see a resurgence of some of the more traditional compute trades?”
The market’s broader concerns extended beyond AI. Brent crude settled at about $106 a barrel, up 1%, as widening instability in the Middle East threatened oil supply. The closure of a Saudi pipeline on Friday blocked a second major source of crude on top of the already-disrupted Strait of Hormuz. Diesel prices hit new records, with the nationwide average trending above $6 a gallon.
Rising fuel costs came against the backdrop of a wider selloff of U.S. government bonds, which pushed the 10-year Treasury yield above 5% on Monday for the second time since 2007. Investors were anticipating an interest-rate increase from the Federal Reserve, with futures placing odds above 90% for a decision due Wednesday.