AI Leaders Want to Slow Down Development For…

Tyler Crowe (0:02)

AI leaders are looking for the brake pedal. Motley Fool Hidden Gems Investing starts now.

Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by long time Fool contributors, Rachel Warren and Travis Hoium, doing a little bit of a mix up. There has been a fair share of we need to slow AI development chatter out there, but this past weekend, that conversation appeared to hit a fever pitch. We had several employees leaving Anthropic and OpenAI over safety concerns, and now both Sam Altman and Dario Amode are calling for the slowing down of development of frontier models, lest they go out of control, I think was the words that Sam Altman used. Even the CIO of the hedge fund, Bridgewater Associates, was on podcasts over the past week, talking about human extinction and the probability was higher than 10 percent, which is kind of silly if you think about it or startling depending on how you want to look at it. This isn't anything new, but it does appear to come at a very specific time, where both OpenAI and Anthropic are on the precipice of IPOs. And spending on these businesses is getting tougher to swallow, especially at the frontier level where the bulk of their spending is going. The cynical view, at least to me, is that all this slowdown chatter comes at a time when they want to slow down spending, more than anything else, without disrupting business growth. So I want to pose the question to both of you.

On a scale of AI will be the death of us, we need to slow down. And we're trying to middle this spending versus growth challenges of business. Where do you land on the spectrum here?

Rachel Warren (1:44)

Honestly, I think the truth is probably somewhere in the middle. But I do tend to take a bit of a more cynical view to what we've been hearing. And I want to talk about why.

I think there's a lot of calculations going on behind the scenes. And I don't think that means that there aren't real justifiable concerns about AI safety and the constraints or lack thereof of some of these frontier labs. But I also think you have to look at the math behind all of this. You talk about OpenAI and Anothropic, right? You're kind of moving out of the easy money venture phase. These are companies that are anticipating to have huge entrances into the public markets where they're going to face a very different level of scrutiny than they have in the private space. And infrastructure spending has become a real black hole. You look at OpenAI's internal projections, which were reported not that long ago by the information, they're expecting a $14 billion loss in 2026 They could have cumulative losses of about $44 billion by 2028

Think about how a single next-gen data center runs about $35 billion on its own. This is not something that Wall Street is necessarily going to be forgiving on.

Talking about Anothropic for a moment, we have heard for a while now from Dario Modit. He's been spending almost the last year warning the industry to slow down. Meanwhile, we also saw a report from the information that Anothropic has locked in $517 billion in compute commitments. That's 14.8 gigawatts of capacity. It's enough to rival just for scale a dozen nuclear reactors. They're funding that obviously with revenue. They have their confidential IPO pipeline. A lot of that is going to Alphabet, Amazon, Microsoft, SpaceX. The outside voices that are making this case as well have a lot of skin in the game. We had an interview with Greg Jensen that we saw from Bridgewater in recent days. He's not a neutral bystander. He was one of the earlier investors in both OpenAI and Anothropic. He's the one that was telling Bloomberg on a recent podcast there's a 30 to 60% chance of a catastrophic AI disaster in the next few years. Bridgewater's own SEC filings show that it's been building up positions in Nvidia, Broadcom, Amazon. We're seeing this push for regulation and compliance costs, but it's more likely to just price out the open-source community and the small players who can't afford the legal overhead. The biggest labs can absorb it. I think the risks are very likely real. I'm more inclined to believe that there are justifiable concerns there, but I also think one of the loudest voices going for caution are the same people holding the largest stakes. You have to question what the motivation is.

Travis Hoium (4:20)

We're in such an interesting time with this entire debate, and from an investment perspective, I mean, we're talking about trillions of dollars and many multi-trillion dollar companies that are involved here. So this isn't something that we should take lightly. And as a reflect on the weekend, it was so interesting to see, first of all, the leaders of these labs almost all agree with what Dario wrote. I mean, that was a little bit stark to me, and it's felt a little bit coordinated. I don't know whether that's good or bad. But I also came away thinking that all of these things can be true. They can be really worried about safety.