AI slowdown calls from Anthropic, OpenAI may weigh on chip stocks, but rally seen intact
Calls from AI executives like Anthropic CEO Dario Amodei and OpenAI CEO Sam Altman to slow the pace of AI development are expected to cause short-term pressure on chipmaker and supply-chain stocks. This sentiment follows a period where the tech-heavy Nasdaq 100 Stock index dropped over 4 percent from its June record, and a US chip shares gauge slumped 14 percent. However, market watchers believe the long-term impact will be limited due to sustained strong demand for computing infrastructure. Investors like Gary Tan of Allspring Global Investments in Singapore suggest that any weakness in these stocks will likely be short-lived given the early stage of AI development and the ongoing outstripping of supply by demand for chips and energy. Some investors also argue that a slower development pace could ultimately benefit the industry by allowing companies more time to monetize existing infrastructure.
The recent calls for a slowdown in AI development from major industry figures like Anthropic's Dario Amodei and OpenAI's Sam Altman present a nuanced picture for Asian tech markets. While an initial sell-off in semiconductor and AI-linked stocks is anticipated, as seen with Asian tech stocks sliding almost 8 percent recently, the underlying demand for computing power and infrastructure remains robust. This suggests that any market dip could be temporary, with companies continuing to invest in the foundational technologies that power AI. Our view is that this pause could be a net positive for the region. As Billy Leung, an investment strategist at Global X Management in Sydney, points out, a moderated pace allows for better commercialization and adoption of existing AI capabilities. This shift from pure infrastructure spending to monetizing built assets could stabilize valuations and provide a clearer path to profitability for Asian tech firms, especially those involved in memory, networking, cooling, and power equipment, which are protected by ongoing projects. However, the scrutiny on tech stock valuations, which assume relentless model development, will intensify. Charu Chanana, chief investment strategist at Saxo Markets in Singapore, notes that while safeguards may lead to more investment in cybersecurity and AI monitoring tools, the market will be watching closely for signs that earnings can justify the soaring infrastructure costs. The real story for Asia is whether this period of reflection translates into more sustainable growth and clearer returns on AI investments, rather than just a temporary blip.
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