The market is already preparing a new strategy in case AI development slows down. What should you buy?

Investors have begun to adjust to a scenario in which the pace of artificial intelligence development is slowing amid renewed discussions about the safety and risks of this technology, Business Insider reports. Although the market’s initial reaction, as measured by indices, was muted, a much more significant rotation is taking place beneath the surface, the publication notes. The AI slowdown won’t completely kill the related trend, but investors are having to rethink which sectors will benefit from efforts to improve safety—or suffer as a result.

Here's what Business Insider recommends investors buy and sell—and what's worth keeping an eye on.

CrowdStrike shares jumped 14% on Monday, Palo Alto Networks shares rose 13%, and the First Trust Nasdaq Cybersecurity ETF gained 6%, despite a decline in the broader market.

If artificial intelligence makes cyberattacks faster, cheaper, and more sophisticated, spending on cybersecurity will become a necessity, BI explains. Shares in cybersecurity companies are becoming a form of insurance for investors. Regardless of whether the technology race accelerates or slows down, companies and governments will need more reliable defenses, the publication notes.

On September 14, IGV, the largest software sector fund, rose 5%, while shares of software developer Adobe, cloud platform ServiceNow, and enterprise service provider Workday gained between 5% and 7%.

Software developers have spent most of the year in an extremely uncomfortable position: they have to invest massive amounts of money in artificial intelligence while fearing that the technology will destroy their own businesses, BI notes. A slower adoption of AI, with an emphasis on security, could mitigate both of these factors. This trend applies to any subsector vulnerable to AI, with software serving as the most striking example, the publication points out.

On September 14, shares of major tech giants such as Alphabet and Meta rose by about 3%, bucking the overall sell-off trend in the AI sector, BI notes.

The era of artificial intelligence, with its heightened focus on security, may give an advantage to companies with large cash reserves, global reach, and well-established businesses. Alphabet and Meta can afford to take a slower path to monetization, unlike smaller, less diversified projects, the publication notes.

The Roundhill Memory ETF , a semiconductor exchange-traded fund, fell 7% during trading on September 14, while the broader Philadelphia Semiconductor Index lost 6%. Key industry players such as Nvidia, Micron, SanDisk, and SK Hynix were also among the decliners.

These companies need to further accelerate the development of AI infrastructure to justify their valuations. This segment is already crowded, so any slowdown caused by security concerns, regulation, or a slowdown in spending could hit it disproportionately hard, BI writes.

On September 12, Anthropic CEO Dario Amodei unexpectedly proposed an initiative to slow down the development of artificial intelligence systems, after which he received support from OpenAI CEO Sam Altman and Tesla and SpaceX CEO Elon Musk.

On Monday, August 14, the Nasdaq stock index fell by more than 1% at the start of trading due to concerns about the sustainability of the AI rally, but subsequently recouped some of its losses. Renowned short seller Michael Burry characterized Anthropic’s move as an artificial attempt to stoke hype ahead of its anticipated IPO, which could be the largest in history. In addition, the situation also resembles an attempt by market leaders to “pull the ladder up behind them” to prevent their currently less successful competitors from catching up, noted Gil Luria, head of technology research at DA Davidson.

This article was AI-translated and verified by a human editor