AI Leaders Want to Slow Down Development For…

Motley Fool Hidden Gems Investing

This episode of Motley Fool Hidden Gems Investing explores the recent wave of AI leaders calling for slower development of frontier models,

Key takeaways

• The call to slow AI development may be strategically timed with impending public market entries, allowing companies to justify high spending while preparing for stricter scrutiny.
• Major AI firms like OpenAI and Anthropic face massive projected losses, raising concerns about sustainability without continued private funding or IPO proceeds.

Main topics

• AI safety concerns and their timing relative to IPOs
• Financial sustainability of frontier AI labs

Notable quotes

"You have to question what the motivation is. The loudest voices calling for caution are the same people holding the largest stakes."

Conclusion

While genuine risks around AI development exist, the timing and tone of recent warnings suggest strategic

Transcript preview

Speaker 3 (0:01) AI leaders are looking for the brake pedal. Motley Fool Hidden Gems investing starts now. Speaker 3 (0:09) Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime Fool contributors Rachel Warren and Travis Hoyum 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 have hit a fever pitch. We had several employees leaving Anthropic and opening AI 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, like talking about human extinction and the probability was higher than 10%, 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 of 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? Speaker 4 (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. I mean, you talk about open AI and anthropic, 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. I mean, 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. You know, 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 Anthropic for a moment. I mean, we have heard for a while now from Dario Amodi. He's been spending almost the last year warning the industry. to slow down. Meanwhile, we also saw a report from the information that Anthropic 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 open AI and anthropic. 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. You know, Bridgewater's own SEC filings show that it's been building up positions in NVIDIA, Broadcom, Amazon. So 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. So 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 calling for caution are the same people holding the largest stakes. You have to question what the motivation is. Speaker 2 (4:19) 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 I 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. Critics can be correct in that they're just trying to pull the ladder up and get regulatory capture so that they can build a moat around their business. Everyone can also be wrong about all of those things. These companies are crying wolf a little bit because they've been doing this for years. Dario Amadei has been one of the biggest critics. And yet he started a company. that is now arguably in the lead in AI development and also thinks that this is going to lead to some terrible... There's a lot of cognitive dissonance going on here. And the history of technology says that something bad will probably happen. We just don't know what that is. When the internet was invented, we didn't necessarily think that was going to lead to more isolation and mental health issues among younger people. But this is where we are today because of... So the root cause and the cause and effect is sort of unknown here. And I think that's the real challenge is that it's almost like these people are saying, hey, you got to protect me from myself because if I continue to develop this, I'm going to do something really bad. And one of the things that's most resonant to me is that there are laws in place for a lot of these things. If you build a product that goes out and hurts people or steals things, it is your fault. And so I almost wonder, too, if, you know, after this Hugging Face incident, my understanding is that there were laws broken. There were felonies committed. And is open AI, we just sort of seem to be kind of glossing over that. So if we, if the next big thing is suddenly financial institutions are broken into and, you know, these AIs steal money, are people going to go to jail? And that's what they're worried about. It all, it all is a very interesting and sort of complicated. push and pull of many things that are probably have threads of truth, but are not completely true. And