Key insights
- A significant tech sell-off, driven by fears of an AI bubble and impacting chip stocks like Arm Holdings, Intel, and Marvell Technology, precedes SpaceX's anticipated IPO. Concerns over the valuation of SpaceX, partly tied to its AI business (xAI), and broader discussions about AI development risks from figures like Sam Altman, contribute to market uncertainty. This tech weakness could negatively impact SpaceX's public debut and broader market sentiment.
Wall Street has been hit by a major tech sell-off just days before Elon Musk's SpaceX is expected to join the US stock market.
The tech-heavy Nasdaq 100 index fell by more than 3pc at one point on Tuesday as fears surrounding a possible AI bubble led to widespread selling of chip stocks.
Arm Holdings, the British chipmaker, fell by 10pc while Intel saw its stock price fall by nearly 7pc.
Microchip maker Marvell Technology suffered a more than 12pc drop, making it the biggest loser on the Nasdaq 100 index.
The sell-off could threaten SpaceX's upcoming public float. Mr Musk's rocket maker is expected to join the Nasdaq as soon as Friday.
While SpaceX is best known for its rocket and satellite business, part of its $1.8tn (£1.35tn) value is tied to Mr Musk's deeply loss-making AI business. Analysts have raised doubts about the company's valuation in part because of xAI.
The tech sell-off came as Sam Altman, the creator of ChatGPT, said countries should be able to demand slower AI development to avoid "catastrophic risks" to humanity.
The OpenAI chief executive called for the creation of an international organisation to monitor AI advances and respond to the threat from the technology.
Writing in a blog post, Mr Altman said: "One goal of such an organisation should be to make it possible for the world to take coordinated action, including slowing frontier development when needed so societal resilience, safety and alignment can keep pace."
He said a new watchdog would help to "reduce catastrophic risk".
OpenAI's main rival, Anthropic, has previously called for a global freeze on cutting-edge AI research to allow safety technology and society time to react to the advances.
Executives at Anthropic said last week: "We believe it would be good for the world to have the option to slow or temporarily pause frontier AI development."
Anthropic released a restricted version of its powerful Mythos AI model on Tuesday, which it said had been "made safe for general use".
The developer of Claude had previously said its Mythos model was too powerful to release to the public because of its advanced hacking abilities.
However, Anthropic's new "Mythos class" Fable 5 model will be released with conservatively tuned safeguards to prevent it being misused.
AI leaders have repeatedly warned that their technology poses a potential threat to human civilisation, raising concerns that it could upend the economy and cost hundreds of millions of jobs.
Despite these statements, they have gone on to raise hundreds of billions of dollars to launch ever more powerful AI systems.
Both Anthropic and OpenAI are targeting initial public offerings this year that could value their businesses at more than $1tn (£750bn) apiece.
Mr Altman said OpenAI's goal was not to replace all jobs with bots, despite his business launching a series of AI agents intended to act like a digital co-worker.
He said: "Entirely automating everything is not the future we want. It would be unfulfilling and it would be dangerous."
The billionaire claimed he did not wish to "see power concentrated among a few companies, governments or individuals".
Mr Altman has reportedly held talks with senior White House officials about the US government taking a stake in the AI lab.
Tech giants previously came together for a global AI safety summit at Bletchley Park in 2023. This led to the launch of the UK's AI Security Institute which has tested AI tools prior to their release.
However, global efforts on AI safety have failed to make progress and the companies have resisted laws that would curtail their dominance.
The launch this year of new AI bots such as Anthropic's Mythos, which the lab has claimed is too dangerous to release because of its hacking capabilities, has renewed focus on AI security.
The White House has become closely involved in the deployment of Mythos, slowing its global rollout because of concerns the AI tool could be misused by hackers.
Mr Altman's comments came as OpenAI filed confidentially with US regulators to go public.
The filing, which came days after Anthropic submitted its own paperwork, means OpenAI could be ready to make a debut on public markets within months.
OpenAI was initially founded as a non-profit AI research lab with a goal of reaching superhuman "artificial general intelligence" while avoiding the potential risks of such technology.
However, it has since launched a profit-making arm and secured tens of billions of dollars in backing.
OpenAI's listing would test the appetite of public market investors for a business that has forecast it will burn through $111bn by 2030.
ChatGPT proved a breakout success in late 2022 and its AI app is used by more than 900 million people.