AI risks and bubble fears rise as investors, policymakers turn cautious at Singapore forums

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Key takeaways

Investors and policymakers voiced existential and financial concerns regarding the AI boom at Singapore conferences.
Temasek CIO Rohit Sipahimalani warned that safety issues or lack of ROI could unwind the AI market narrative.
Ray Dalio stated that AI is in a classic bubble and higher interest rates could soon cause it to burst.

Existential risks and security concerns

Existential and financial risks posed by the artificial intelligence boom were top of mind for investors and policymakers at two conferences in Singapore on Wednesday, highlighting a cautious shift in mood around the AI trade. Concerns that once centred on frothy valuations have broadened into a wide swathe of fears, including autonomous systems slipping out of human control, AI-designed bioweapons and the possibility that massive spending on the technology may never pay off.

“Anyone who tells you I've got absolute control over my autonomous agent... obviously doesn't know what he's talking about. So loss of control is a real threat,” Singaporean Foreign Minister Vivian Balakrishnan said at the Milken Institute Asia Summit. Last month, the heads of leading US AI labs came together in a rare show of unity to call for slowing the technology's development, warning it could soon improve on its own and slip beyond human control.

Claude maker Anthropic plans to caution potential investors in its IPO that advanced AI could pose “catastrophic or existential risks to humanity,” Reuters reported last week. Balakrishnan said on Wednesday the risk of state and non-state actors using the technology to build new weapons, “whether it's in chemistry or biology or in weapons of mass destruction, is very real.”

Kiran Mazumdar-Shaw, founder and chairperson of Indian biopharmaceutical firm Biocon, said that while AI was a force for good, bad actors could use it to design new viruses or pathogens. “The real existential threat is bioterrorism,” she said at the Forbes Global CEO Conference, calling for guardrails and governance. “I don't think self-governance is going to work.”

Bubble worries and market impacts

Investors' faith in the AI trade has propped up the stock market even as higher energy prices and episodic routs in the bond market have pushed borrowing costs in major economies to multi-decade highs. But worries over how long the AI rally can last and what it means for global markets have persist.

“If the AI narrative is unwound because of safety issues, regulation or because as we go through 2027, end users don't see sufficient ROI (return on investment), there could be issues,” said Rohit Sipahimalani, chief investment officer at Singapore state investor Temasek. “The biggest risk to the market is the AI narrative. Right now, it seems very strong,” Sipahimalani said at the Milken Institute event.

Bridgewater Associates founder Ray Dalio was less sanguine, saying AI was in a “classic bubble” and there was a difference between “how terrific a technology is and how terrific an investment is.” He told the Forbes event that rising rates and changing circumstances had not “yet had a negative effect on other things,” but that there was pressure for interest rates to rise further.

Once higher rates began to bite, the bubble would start to burst, Dalio said. “I think we're close to that.”

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