Postponing the AI apocalypse

Postponing the AI apocalypse

Warnings of the existential risks posed by artificial intelligence (AI) prompted a sharp selloff in AI-related stocks on Monday, with the tech-heavy Nasdaq 100 falling to a six-week low in early trading. Backed by prominent figures in the AI sector, the warnings met with a mixed reception. US President Donald Trump dismissed them as a “sick conspiracy” against the technology while Michael Burry labelled them a “cover for real uncontrollable slowing growth”. Elsewhere, Microsoft [MSFT] drafted a code of conduct to keep its in-house AI under human control and South Korea’s internet security agency announced plans to update AI agent-related guidelines. 

Revenge of the SaaS?

Monday’s selloff revealed a key split in the AI trade, with enterprise software stocks outperforming semiconductors by nearly 10 points in a single day, the highest on record. Software-as-a-service and cyber-security stocks were among the biggest winners, with Palo Alto Networks [PANW] and CrowdStrike [CRWD] each rising 13%, while shares of ServiceNow [NOW] and Salesforce [CRM] jumped 7% and nearly 5%, respectively. The Information’s Martin Peers noted that the split is likely to be a one-day reaction but “gives some sense of the winners and losers in a real AI downturn”.

Waymo’s road ahead

The Alphabet-backed [GOOGL] autonomous driving company unveiled major expansions to its network early this week. On Monday, Waymo announced it would offer rides to the general public in Las Vegas; the next day, it debuted a partnership with Japanese taxi app operator GO [581A:T] and taxi company Nihon Kotsu to launch Japan’s first autonomous commercial taxi service in Tokyo in 2027. The service will eventually run 100 vehicles across key neighbourhoods, although regulatory approvals are still pending. 

Three Chinese stocks driving the AI race

As the AI race between the US and China intensifies, Aureon looks at three Chinese stocks riding the wave of their latest flagship models. Alibaba [BABA], MiniMax [MMXGY] and Z.ai [2513:HK] all released major models this summer, but their stocks have diverged sharply. Z.ai has surged over 500% since January while Alibaba and MiniMax have slipped. With MiniMax and Z.ai both projected to stay unprofitable well into the next decade, we weigh the risks against Alibaba’s more established exposure to the theme.

HK’s AI IPO glut

Despite equity issuance on Hong Kong’s stock exchange already exceeding last year’s total – aided by buzzy IPOs from AI firms such as Z.ai and MiniMax – the index has slid 3% year-to-date. Some investors now warn that new public companies are diverting cash from more established names. The disparity between IPO figures and market performance has underlined weak global demand for Chinese stocks, even as listing in Hong Kong has become one of the only funding options for domestic companies faced with slowing credit growth in the mainland.

More clarity on CLARITY?

Republican senators posted the final text for the CLARITY Act on Monday, ahead of the US Senate vote scheduled for Tuesday afternoon. Democrats have already sent a counteroffer, but the odds of the cryptocurrency-related act passing this year have dropped to 18% on Polymarket, down from above 30%. Bitcoin [BTC], meanwhile, has paused its rally, hovering at around $77,500 early Tuesday as investors wait to see if the bill makes it past partisan wrangling.

Bloom Energy’s AI power surge

Bloom Energy [BE] will join the S&P 500 on 21 September, capping a run that has seen its share price surge more than 2,400% in two years on soaring demand for on-site AI data centre power. The company posted record Q2 revenue of $1.065bn, up 165.5% year-on-year, alongside a swing to GAAP profitability. Aureon weighs whether Bloom’s premium valuation, now trading at roughly 25 times sales, can be justified against slower-growing rivals GE Vernova [GEV] and Plug Power [PLUG].