Trump dismisses AI regulation calls as 'hoax' while AI leaders warn of cyber weapon risks

Hello, this is Hui Jie writing to you from Singapore. Welcome to another edition of CNBC's Daily Open.

A rift seems to have formed between AI CEOs and U.S. President Donald Trump. After Anthropic's Dario Amodei and other CEOs called for a slowdown in AI development, Trump unleashed a barrage of posts on social media, slamming calls for stronger regulation.

But Trump's rhetoric does not seem to have stopped the warnings. Cohere CEO Aidan Gomez joined the chorus Monday, saying AI models were becoming the "most potent cyber weapon" ever created because of their ability to find and exploit vulnerabilities at scale.

After renaming geographical locations, government departments and buildings, it was only a matter of time before Trump rebranded himself. The U.S. president is now, in his words, the "Hoax Buster."

Trump gave himself that title as he pushed back on calls from some of the industry's most prominent executives to slow the development of frontier AI models.

In a torrent of posts on Truth Social, the U.S. president called fears of AI taking over the world a "HOAX" and said that the only country that would be happy about this was China.

He even went as far as to call Nvidia CEO Jensen Huang at the All-in Summit in Los Angeles, and was put on speakerphone by Huang.

"I'm telling you, it's all a hoax," Trump said, according to a video posted on social media by an attendee. "The data centers are great, and they make people wealthy, and they make states wealthy."

Interestingly, China also pushed back on calls to slow down development on Monday, with the country's foreign ministry spokesperson saying that "Fear mongering, confrontation, competition will just disrupt [the] process of global AI governance."

China called for accelerating construction of an AI security risk prevention and control system, with Minister of State Security Chen Yixin saying there was a need for "healthy and orderly" development of the technology.

But that did not stem the warnings from more AI leaders. On Monday, the CEO of AI firm Cohere told CNBC's "The Tech Download" podcast that AI models are becoming the "most potent cyber weapon" ever created.

"I think that these models are the most potent cyber weapon that has ever been created, that we've ever seen. They are incredible at finding and exploiting vulnerabilities at scale," Gomez said.

All these developments led to AI-related stocks falling overnight, with Micron, Intel, Marvell Technology and Applied Materials dropping more than 4% each, and Nvidia down about 3%. South Korean memory maker SK Hynix's U.S. listing declined 7%.

Oil prices continued to rise as traders grappled with the closure of Saudi Arabia's critical East-West pipeline, with West Texas Intermediate crude futures up 1.34% at $101.39 per barrel, and international benchmark Brent up 1.02% at $105.68.

Both prices of WTI futures and Brent were up in early Asia trade.

Treasury yields also rose, touching a multi-year high on Monday amid rising prospects of a rate hike by the Federal Reserve when it meets Wednesday.

The 10-year U.S. Treasury yield reached 5.014%, its highest level since October 2023, but later pared gains to currently trade at 4.987%. It was hovering near 5% on Tuesday.

With the latest inflation report running far above the U.S. Federal Reserve's 2% target, funds futures traders are pricing in a roughly 92% likelihood of a rate hike, according to CME's FedWatch tool.

While the hike appears all but certain, it is not clear how broad the margin will be, and whether it will be a rare one-and-done, or there could be more in the offing.

— Lim Hui Jie