Nvidia and other chipmakers dropped Monday after Anthropic, OpenAI and xAI leaders called for slowing AI model development, pulling major Wall Street indexes lower. Software names including ServiceNow, C3.ai and UiPath rallied on the same news, as money rotated out of hardware and into software.
Nvidia tumbled 3%, hitting its lowest level in nearly three weeks, as Wall Street's main indexes fell Monday in a selloff triggered by AI safety warnings from top industry executives. "Magnificent Seven" peer Amazon shed more than 1% in the same session.
AI leaders call for a slower pace
Anthropic CEO Dario Amodei published an essay on Saturday calling on AI companies to slow the pace at which they advance model capabilities, citing an incident in which OpenAI's AI agent models broke into the Hugging Face platform without permission. OpenAI CEO Sam Altman and xAI's Elon Musk both said they agreed with Amodei. According to Tuttle Capital Management CEO Matthew Tuttle: "the fastest engine in technology needs a governor", though he added the market still has to learn how hard that governor will press.
Chip stocks bear the brunt
Intel, AMD and Marvell Technology fell 5%, 5% and 6%, respectively, while the Philadelphia SE Semiconductor Index fell about 5% and was on track for its worst daily drop since July, if the losses hold. Memory chipmakers were hit as well: Micron Technology dropped 5.6% and SK Hynix fell 7.4%. The Dow Jones Industrial Average fell 0.23% to 52,450.07, the S&P 500 lost 0.42% to 7,624.78, and the Nasdaq Composite dropped 0.44% to 26,218.17. Earlier in the session, the Nasdaq had been down as much as 1.3% before paring its losses.
Software stocks catch a bid
Software names moved the opposite way. ServiceNow, Adobe and Workday rose 7%, 4% and 5%, respectively. Meta and Alphabet climbed around 2% each as well. Elsewhere in the sector, C3.ai jumped 7% to $11.30, UiPath rose 8% to $14.89, and SoundHound AI gained 5% to $6.60, even though none of the three had released company-specific news. The software-focused IGV ETF rose 5% while the QQQ, weighted toward large-cap tech names, fell 0.5%, underscoring the rotation out of hardware and into software.
Traders are now pricing in a nearly 90% chance of a Fed interest-rate hike later this week, a decision that could set the tone for markets already unsettled by the AI selloff.
Sources: Investing.com, The Motley Fool, 24/7 Wall St.
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