Investors are growing anxious about the stock market’s AI-led rally after industry leaders called for reining in the pace of development, although some say guardrails could ultimately benefit the sector.
Warnings that AI could endanger humanity were followed at the weekend by calls from AI leaders, including Anthropic CEO Dario Amodei, to slow the rate of advancement and buy more time to manage the risks.
Heavy spending by the technology giants on AI data centres has lifted a wide range of companies and their share prices, helping the S&P 500 more than double since the bull market that began in October 2022. Wall Street has been watching for any sign that the spending – expected to reach nearly US$800-billion in 2026 – could lose steam.
“This becomes a problem if in fact you see orders being cancelled, you see data centres, construction deals being cancelled,” said Chuck Carlson, CEO of Horizon Investment Services in Indiana, US. “I need to see something concrete that, in fact, there is a slowdown versus just talk.”
A forced pause by OpenAI and Anthropic, the leading AI developers, could raise questions about the valuations of the two companies, both of which are expected to sell shares to the public in future. With both eventually expected to be publicly owned, “shareholders are going to be demanding of them to continue to grow”, Carlson said.
The broad market index has gained more than 11% so far this year, led by profit growth built on the past few years of heavy spending.
Hyperscaler spending
The AI hyperscalers – Microsoft, Alphabet, Amazon, Meta Platforms and Oracle – are expected to spend about $795-billion on capital projects this year, and nearly $1.08-trillion in 2027, according to BofA Global Research. That buildout is feeding through to South African IT budgets, where Gartner expects local spending to grow 19.8% this year to $28.1-billion.
Much of the global spending is being funnelled to semiconductor companies, whose shares and profits have soared this year but which bore the brunt of Monday’s selling. The Philadelphia SE Semiconductor Index is still up nearly 60% in 2026.
“Markets are punishing the picks-and-shovels layer harder than the hyperscalers because it’s the layer most exposed to a slowdown in the rate of capability improvement,” said Erik Kratz, chief investment officer and co-head of wealth at Arena Private Wealth in Chicago.
Kratz said there could be a silver lining in closer scrutiny of the industry’s safety record. “The buildout doesn’t stop because the CEOs asked for guardrails. If anything, a credible safety framework makes the long-duration capex easier to underwrite.”
The jolt reminded some investors of the market’s stumble in early 2025 after the emergence of China’s DeepSeek model, which raised doubts about the pace of spending on AI infrastructure. That sell-off proved a short-lived hiccup for the AI trade.
Investors are now weighing a far broader set of risks, including the possibility of more government regulation – even though US President Donald Trump said on Monday that the safety threats from AI were “a hoax” and played down the need for rules.
“The real risk isn’t that development actually slows – it’s regulatory overreaction,” Kratz said.
Growth concerns may not cut short the investment boom, but several factors could affect how fast AI develops. Michael Bruun, global co-head of private equity at Goldman Sachs Alternatives, said investors were working out whether there would be “more or less regulation, whether it’s more or less geopolitical tension, whether there are new paradigms on the technology side emerging”.
Still, Bruun said he saw opportunities to deploy capital “into the epicentre of AI”.
If doubts about AI grow, share prices could prove vulnerable. The S&P 500 and the Nasdaq Composite are both only about 2% below record highs, and the market is facing higher bond yields, rising oil prices and the possibility that the US Federal Reserve will raise interest rates this week to rein in inflation.
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“AI semiconductor and infrastructure stocks have long priced in an uninterrupted capex boom, leaving virtually zero margin of error for an industry-imposed speed limit,” said James Humphries, managing partner at Mindset Wealth Management in Indianapolis, Indiana. “If the market is already staring down stickier-than-expected inflation and a murky Fed rate path, cutting off the market’s primary growth engine leaves the broader indices completely exposed to those macro headwinds.” — Lewis Krauskopf and Laura Matthews, with Saeed Azhar and Saqib Iqbal Ahmed, (c) 2026 Reuters
