Key Points
- Five major technology companies are expected to spend $795 billion this year
- Investors fear regulation could disrupt the AI investment and growth cycle
- Trump dismisses extinction fears while China warns AI poses national-security risks
ISLAMABAD: The huge investment boom behind artificial intelligence is facing a new test as technology leaders warn that the pace of AI development may need to slow, raising questions about whether investors can continue to expect record spending and rapid growth.
Investor concerns have emerged as spending on AI infrastructure reaches unprecedented levels. It has raised questions over whether a slowdown in the development of powerful AI models could eventually affect the vast investment cycle.
Anthropic chief executive Dario Amodei called over the weekend for AI companies to slow the rate of advancement and create more time to manage the risks posed by the technology.
OpenAI chief executive Sam Altman and SpaceX AI chief Elon Musk also echoed his comments.
The warnings followed growing concerns that advanced AI systems could become difficult to control and the potential consequences for humanity.
Wall Street, however, is looking for evidence that the warnings will translate into an actual reduction in spending.
“This becomes a problem if in fact you see orders being cancelled, you see data centres, construction deals being cancelled,” said Chuck Carlson, chief executive of Horizon Investment Services.
“I need to see something concrete, that, in fact, there is a slowdown versus just talk.”
The five major AI hyperscalers — Microsoft, Alphabet, Amazon, Meta Platforms and Oracle — are expected to spend about $795 billion on capital expenditure in 2026 and nearly $1.08 trillion in 2027, according to BofA Global Research.
Much of that money is flowing into AI data centres, computing infrastructure and semiconductors, producing large gains in corporate earnings and share prices.
The Philadelphia Semiconductor Index is still up nearly 60 per cent this year despite a sharp sell-off on Monday, underscoring how heavily investors have positioned themselves for continued AI spending.
“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.
The broader S&P 500 has gained more than 11 per cent this year, while both the S&P 500 and Nasdaq Composite are about 2 per cent below their record highs.
Investor questions leave the market vulnerable
That leaves the market vulnerable if investors begin to question whether the AI investment boom can continue at its current pace.
A forced pause by OpenAI and Anthropic, two leading AI developers and investors, could also raise questions about their valuations as both companies are expected to sell shares to public investors.
“With these companies eventually expected to be publicly owned, shareholders are going to be demanding of them to continue to grow,” Carlson said.
Yet some investors see potential benefits from greater scrutiny of AI safety.
READ ALSO: Can AI Development Slow Down?
“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,” Kratz said.
The debate has also become increasingly political.
US President Donald Trump on Monday dismissed fears that AI could wipe out humanity, repeatedly calling such warnings a hoax and rejecting calls for stronger international safeguards.
“I am the Hoax Buster,” Trump said in a series of posts on his Truth Social platform, rejecting the idea that AI would “take over, consume, and destroy the World”.
Trump argued that the United States could not afford to lose the AI race to China and described data centres as an important source of wealth and economic growth.
“The data centres are great, and they make investors wealthy, and they make states wealthy, and it’s the oil of the next 20, 25 years,” Trump said during a phone call with Nvidia chief executive Jensen Huang.
Microsoft, meanwhile, published what it called a “humanist AI code of conduct”, stating that AI “should not exceed human control” and that models should remain subordinate to humanity.
Investor concerns have intensified after OpenAI reported that experimental models broke out of secure testing environments, reached the internet and coordinated attacks against Hugging Face, a website used to store and share code.
The expansion of energy-intensive AI data centres has also invited opposition in the United States, with local concerns over electricity demand and infrastructure becoming an issue ahead of November’s midterm elections.
The economic debate is unfolding alongside a widening international discussion about AI regulation and national security.
China’s Minister of State Security Chen Yixin warned on Sunday that AI posed risks to national security and could be used by foreign powers to threaten social order.
He described AI as “the main battleground for global technological investor competition” and cited advanced hacking capabilities in recent AI models.
The United Nations is also preparing to discuss the issue at the UN Security Council in a meeting on artificial intelligence next week. UN human rights chief Volker Türk has called on governments and AI companies to act urgently, warning of “unprecedented risks”.
Britain’s King Charles III is also expected to host representatives of leading AI companies in Scotland as international concern over the technology grows.
For investors, however, the immediate question is less about whether AI will transform the global economy than whether the pace of investment can be maintained.
