AI Warning Fuels Cybersecurity Stock Surge as AI and Chips Slump

Cybersecurity stocks made a strong showing in Monday’s trading with names like CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT) leading the S&P 500.

But artificial intelligence-associated names sank on comments from leaders in the field about rising safety concerns associated with the industry. The storm began when Anthropic CEO Dario Amodei, whose company makes Claude, called for an AI slowdown in order to mitigate some of the risks of runaway strength of this nascent technology, with SpaceX’s xAI (SPCX) CEO Elon Musk, Google (GOOGL) DeepMind chief Demis Hassabis, and OpenAI CEO Sam Altman publicly echoing the comments. Altman said OpenAI, which makes ChatGPT, would delay a planned IPO this year to further out in 2027. Musk replied “Dario is right” on social media yet also announced Grok 4.8, a new AI model with 2.5 trillion parameters, in the same day. That exemplifies the difficulties faced by these companies: slowing down means falling behind not only the competition but also behind China specifically.

Here are three things to consider about this potential shift in the race toward advanced AI.

Big Returns Monday: Cybersecurity and Software: The cybersecurity group was one of the strongest parts of the market Monday, with S&P 500 members CloudFlare (NET), Okta (OKTA), Zscaler (ZS), Check Point Software (CHKP), and SentinelOne (S) joining CRWD, PANW, and FTNT in the outsized gains. The Amplify Cybersecurity ETF (HACK) rose nearly 8% Monday as the sector led to the upside.

For as many opportunities as AI offers, it also brings unprecedented new threats. This is a major tailwind for cybersecurity, especially as fears over the risks intensified recently on the heels of a viral social media post from former Anthropic AI research Jacob Coxon. He said that people building AI believe that it could destroy humanity by the end of the decade. Many other S&P software names including Adobe (ADBE), Intuit (INTU) also rallied as AI disruption fears moderated.

Big Decliners: Computer Chips and Computer Hardware: CEO AI warnings sent shockwaves throughout the semiconductor names and many AI-adjacent sectors. Some of the worst declines in the S&P 500 including many companies in the photonics and fiber optics industries like Corning (GLW), Lumentum (LITE), Ciena (CIEN), and Coherent (COHR). These products are critical parts of AI data centers and supercomputers due to the high speed and low latency connectivity they offer. Other big decliners included Hewlett Packard Enterprise (HPE), which makes largescale computer servers, and computer chip sector names like Skyworks Solutions (SWKS), Lam Research (LRCX), Applied Materials (AMAT), Marvell Technology (MRVL).

Other Possible Ripple Effects from AI Warnings: If one were to think about the input needs of the biggest winners/losers yesterday, there is significant overlap. Cybersecurity, software, and computer hardware have many similar needs in terms of advanced physical computer infrastructure and data/compute resources. However, if AI does indeed start to experience a slowdown, utility stocks could potentially suffer if expectations for future electricity demand from power-hungry data centers coming in below projections. This could also be on the minds of traders, as the State Street Utilities SPDR ETF (XLU) sank -1.34% Monday. Some commodities also could suffer. Copper is perhaps one of the most crucial components in computer infrastructure, and Copper futures (/HG) fell -2.43% Monday. Steel and aluminum are also major inputs for physical frames cooling infrastructure, with Nucor (NUE) and Steel Dynamics (STLD) falling -1.85% and -2.19% yesterday, respectively.

See: Week Ahead: Fed Interest Rate Decision and Heavy Economic Data

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, futures commission merchant or forex dealer member.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.