Tech sell-off from Wall Street to Asia as investors de-risk in AI

It isn’t a panic, but it is an indication that investors are exercising some caution

Technology stocks came under pressure yesterday in the wake of last week’s AI apocalypse warnings and calls from Anthropic, OpenAI and xAI to “pace the frontier.”

Right up until the end of last week we had no real idea what this pacing would look like, but Dario Amodei has since published an open letter setting out some proposals including embedded third-party evaluators who would verify adherence to safety principles and any other pacing commitments. Amodei committed Anthropic to this proposal unilaterally.

Meanwhile, Sam Altman has publicly parked OpenAI’s IPO this year to “focus on safety.” It is unclear why OpenAI developing models within a safe, ethical framework should preclude an IPO, and it’s also unclear how the democratic and global coordination that Amodei calls for could be brought to bear.

Nonetheless, investors reacted with concern yesterday. Chip manufacturers were hardest hit. Nvidia stock closed 3.3% down, AMD 4%, Micron Technology 5% and Intel 6%.

However, it was mainly chipmakers taking the brunt of investor concerns. Although Amazon stocks closed a little over 1% down and Oracle dropped a further 3.6% (which given its exposure to OpenAI isn’t surprising) Microsoft, Alphabet and Meta all recorded small gains.

Asia and Europe also hit

The sell-off began in Asian markets on Sunday night. South Korean stocks including SK Hynix and Samsung both fell sharply and shares in Japanese tech lender SoftBank have been wildly volatile, plunging 11% on Monday but bouncing back by 7.5% earlier this morning. Softbank has invested or committed to invest around $65bn in OpenAI, and if an IPO is off the agenda this year, then the moment when SoftBank can monetise some of the investment is delayed. In the meantime, SoftBank must find a way to keep financing this debt.

Taiwan’s chip sector also took a hit, with TSMC shares down a little over 1%.

In Europe, shares in Dutch manufacturer and semiconductor industry supplier ASML dropped by 6%.

Computing says:

Whilst the value of stocks most heavily exposed to the AI buildout has been more volatile, analysts are not calling the popping of the bubble just yet. The sell-off is simply being viewed as a pause rather than the beginning of the end, with investors no doubt cheered by Donald Trump’s dismissal of any kind of attempt to regulate or control of AI as a “sick conspiracy.”

The fact that the hyperscalers weren’t really affected by yesterday’s sell-off indicates that investor optimism about endless AI demand isn’t going anywhere, at least for now.

Nonetheless, it may indicate that some investors are perhaps a little less willing to take growth narratives on faith than they were 12 or 18 months ago, particularly as debt piles up and bond yields – particularly on government bonds - rise.

The recent ticking back up of oil prices may also be spooking investors. Markets seem less inclined to believe that the conflict in the Middle East will be over anytime soon. The Strait of Hormuz remains effectively closed, and a recent workaround – the East-West pipeline in Saudi Arabia has also been damaged by attacks by Iran-sponsored Houthi rebels.

More expensive oil means more expensive everything – and that includes chips, enterprise and consumer technology.