The Real Reason AI CEOs Suddenly Want To Slow Down

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zayd Admani and today is Monday, September 14th. In today's episode, we'll tell you why the market is pricing in a 90% chance of a Fed rate hike this week. I'll also break down why top AI CEOs are calling for a slowdown in AI development and the impact that's having on the markets. Then stick around to the end of the show to find out why Tesla is gaining EV market share in the U.S. while selling fewer cars. We got a great show for you today. Let's go. Markets are coming off a down week despite a surprising bounce on Friday. On Friday of last week, the S&P and Nasdaq both climbed nearly 1% despite the hotter than expected CPI report. We broke down that report on Friday's show, so go check that out if you missed it. Despite that rally on Friday, it wasn't enough to save the week. All three major indices finished in the red. That brings me to this week where I think the macro factors will continue to drive the market. The oil prices continue to rise. Brent crude is hovering near $108 a barrel after Saudi Arabia shut down their East-West oil pipeline after multiple attacks. That pipeline can move roughly 7 million barrels a day, and it was Saudi Arabia's main way of bypassing the Strait of Hormuz. With that pipeline being shut down, along with all the disruptions happening in the country, that's going to continue to reduce the supply of oil in the market, which is why prices are going back up. Meanwhile, you have the 10-year treasury yield hovering right around 4.97% and getting really close to that psychological 5% mark. The macro story is still the main focus right now, and all of that sets the stage for the main event this week, which is the Fed meeting. On Friday of this week, we will find out if the Fed decides to keep interest rates unchanged or actually go through with a rate hike. At this point, the market is convinced the Fed will be hiking rates. The odds of a rate hike are up to 90% as of this morning. Now, if you're a daily listener, you know that I've thought the Fed was going to hold off on hiking rates for at least one more meeting, but the market clearly doesn't think so. And there are a few factors why. For one, the CPI report in August showed that inflation was up 3.4% year-over-year thanks to higher energy prices. And the key number from that report was that core CPI in August was up 0.3% month-over-month. Core CPI strips away energy and food prices because they tend to be volatile, but the fact that that's going up 0.3% is a sign that higher energy prices are now bleeding into other sectors of the economy and driving up costs. And with the situation in the Middle East and oil threatening to stay in the triple digits, the Fed might not have a choice but to hike rates to slow down the economy to try to cool off inflation. So we'll see what the Fed decides to do this week and how the markets react. Many Wall Street analysts still think the stock market bull run will continue despite the rate hike. The analysts point to strong corporate earnings and all that AI investment. Now we'll see if the AI investments continue. We'll talk more about that in a second. Things aren't off to a great start this week. I'm looking at the tape in the pre-market and man, there's a lot of red right now, especially in tech stocks. So it should be a very interesting week. We're going to be staying on top of all of it. So if you're new here, definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop. Let's run through some headlines. And today we're talking about AI doomerism because this is the story driving the tech sell-off today. Over the weekend, some of the biggest names in AI came out and said that we need to slow down AI development. This all started on Saturday when Anthropic CEO Dario Amadei published a 3,800-word essay saying the AI industry needs to slow down the development of cutting-edge AI models before something goes seriously wrong. Those were literally his words. And within hours of that essay, Sam Altman, Elon Musk, and Google's DeepMind CEO Demis Hassabi all publicly agreed with him. And then on Sunday, Microsoft CEO Satya Nadella also said that he supports deliberate pacing of AI development as well. So you have four of the biggest AI companies in the world who normally are competing with one another all saying the same thing on the same weekend. And the reason for the freakout is that these AI models are apparently advancing way faster than the companies expected. The biggest concern is something called recursive self-improvement, basically AI becoming good enough that it can build a better version of itself. We heard a similar warning from former Anthropic AI researcher last week who quit his job because he was concerned about AI safety. We talked about that on the show. I kind of brushed it off. But it's a totally different thing hearing it from the CEOs of these companies. And not just one CEO, multiple CEOs. Now, there have been some incidents that are leading to the panic. Like, for example, back in July, OpenAI was testing more than 1,200 advanced AI agents in what it called a controlled environment. Well, some of these AI agents found their way onto the open internet and created their own private message board to communicate with one another. And they eventually hacked the AI company Hugging Face. Anthropic said they've had some similar incidents as well. And that's why CEO Dario Amadei is proposing this idea of pacing the frontier. He wants independent safety evaluators to basically get employee-level access inside Anthropic so they can monitor these models while they're being trained and not just after they've been released. He also wants the biggest AI labs to agree on common safety standards and eventually coordinate internationally on how quickly the frontier models should be developed. Now, the market's reaction to this wasn't great. They don't like talks of a slowdown. Chips and other AI stocks are getting crushed this morning, but we'll talk more about that in a bit. And look, all this AI safety talk is coming at a key moment for Anthropic and OpenAI. Both these companies are planning to IPO soon. Now, Sam Altman did confirm that OpenAI would not be going public this year, but all signs point to an Anthropic IPO coming within the next few weeks. And that's why there are some people, including me, that think all this AI safety talk is more of a way for OpenAI and Anthropic to cement themselves as the leaders of the AI race. I mean, like, the safety concerns could be genuine. I'm still a little skeptical about that, but there's definitely a big business incentive here at the same time. Anthropic and OpenAI are currently the companies at the front of the AI race. So if you're already leading the race and suddenly everybody agrees to slow down, well, that's not a bad thing. The more regulation you add now when it comes to AI development, the harder it becomes for competitors to come and challenge Anthropic and OpenAI. And, you know, OpenAI and Anthropic probably don't want more competition. Like, we still don't know what their business looks like under the hood. Are these companies even profitable? Or if not, when will they become profitable? For now, though, it's pretty clear that competition is forcing both OpenAI and Anthropic to keep prices low. And here's how I think about it. If OpenAI and Anthropic are so worried about safety, well, they can slow down themselves. Why are they trying to get the government to slow down AI development? And here's the other thing. Even if every American AI company does agree to pump the brakes on AI development, I don't think China is going to agree to that. In fact, China already came out and called all of this fear-mongering. So I don't think China is going to be slowing down anytime soon. In fact, Dario himself admitted that this was the toughest part for them. The military and economic incentive to get ahead in AI are so enormous that he doesn't even know whether a global limit on AI is even possible. So at the end of the day, I don't think any of these companies are going to slow down unless the government enforces a slowdown. And by the way, as I'm recording this, President Trump just posted on Truth Social blasting Dario Amadei and saying that there is no need for AI regulation. So there you have it. I don't think the federal government is going to be getting involved in here anytime soon. Maybe I'm wrong and too foolish or too optimistic to take this threat of AI very seriously. But unless Sam or Dario postponed their IPOs completely or stop training new AI models, I think it'll be business as usual. Let me know in the comments on what you guys think. This is a hot button topic. Do you think there should be a worldwide slowdown on AI development? I guess the follow-up question is, do you think that it'll ever happen? Drop your thoughts on Spotify and YouTube. Let's talk about some stocks making moves today. Cybersecurity stocks are having a great day. Companies like CrowdStrike and Palo Alto Networks are both up roughly 10% this morning at the time of this recording. And this is directly connected to the AI story that we just talked about. There's real fear that these AI models are getting too powerful. And whether AI development slows down or not, we already know these models are powerful enough to hack into companies. So as AI models become even more powerful, they could pose one of the biggest cybersecurity threats out there. So with that cybersecurity threat already out there, this could be a big boost for cybersecurity companies like CrowdStrike and Palo Alto Networks, which is why their stock is up big today. Now on the flip side, AI infrastructure names are getting smoked. Companies like Intel, Micron, SanDisk, and Marvell are all down 5% to 6% this morning. And again, it's because of the AI slowdown story we just talked about. If frontier AI development actually does slow down, well then these AI labs won't need to buy as many GPUs or memory chips or networking equipment or data center capacity as quickly as Wall Street has been assuming. The market is pricing in that possibility, despite the AI slowdown stuff just being talks for right now. Let's wrap the show with a fun fact. Tesla is regaining their dominance of the US EV market, even though Tesla is selling fewer cars. According to new data from Motor Intelligence, Tesla's shares of US EV sales climbed to 52% this year through the month of August. That's a pretty significant bounce back from their all-time lows of 41% last year. And all of this is happening while Tesla's US sales are down 16% this year compared to last year. But the reason that Tesla is gaining market share is because the EV sales from the other car manufacturers are down worse. In fact, the broader US EV sales have shrunk by 30% this year because of federal tax credits for EVs expiring last year. And that's mostly impacted the legacy automakers. A lot of the traditional automakers are pulling back from EVs. Ford, GM, Volkswagen, and others have all cut their EV production. So at this point, Tesla is kind of becoming the only game in town for someone that really wants an EV. And even Tesla has hollowed out their EV lineup. The company discontinued the Model S and Model X earlier this year. And the reason for that is that most people are just buying the Model Y. One out of every three EVs sold in America this year has been the Model Y. Meanwhile, sales of Model 3s are down 34% and Tesla has sold fewer than 10,000 Cybertrucks. Big picture here, I think it's possible the era of EVs might have peaked in the US. And as legacy automakers cut back, Tesla will take more and more market share moving forward. But even at this point, Tesla seems to be more focused on becoming a robo-taxi and robot company than just an EV company. At least that's how the market is pricing them at because Tesla's market cap is still over a trillion dollars today. So the market is clearly banking that Tesla will make the pivot to robo-taxis and robots in the near future. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys back here tomorrow.