Data Centre Stocks Wobble Amid AI Development Slowdown Fears

Data centre stocks are on edge due to concerns that AI model development could slow down. This has led to a reevaluation of the US data centre investment boom, which has been driven by companies like Anthropic and OpenAI.

The market reacted sharply after Dario Amodei, Anthropic's CEO, proposed slowing the pace of frontier-model development over the weekend. AI infrastructure shares fell broadly, with GE Vernova sliding nearly 9%, Caterpillar dropping more than 4%, and Vertiv falling nearly 8%.

The impact is not limited to these companies alone. Oracle, which has been reshaping itself into an AI beneficiary by investing billions of dollars in computing equipment and data centres, also declined nearly 4%. The same goes for Dell and Hewlett Packard Enterprise, who are tied to the trend.

Rishi Jaluria, an equity analyst at RBC Capital Markets, pointed out that a slowdown in model development would be a headwind for Oracle's cloud infrastructure business, which has been driving its share price.