Threat from new AI tools wiped out $300 billion of capitalization in a day

A tool for lawyers released by AI startup Anthropic triggered a massive collapse in quotations in the software and data processing sectors. Investors began to get rid of securities of companies with at least minimal vulnerability to the new technology en masse, and in one day destroyed about $300 billion of market value.

The reason for the sale was the publication on Anthropic's website about new features of its Cowork AI assistant. The startup unveiled a tool for corporate lawyers that can automate contract review and legal briefs. Although Anthropic indicated that all results of the plug-in must be verified by licensed professionals, investors perceived this as a direct threat to existing software developers (software) and data providers.

The market reaction followed on February 3 at trading in London - before the start of preliminary trading in the United States. Shares of credit scoring service Experian, software developer for lawyers RELX, as well as London Stock Exchange Group (LSEG) were hit. After opening of stock exchanges in New York, the sell-off expanded. As a result, a basket of shares of U.S. software developers tracked by Goldman Sachs fell in price by 6%, and the index of financial sector companies collapsed by almost 7%, Bloomberg writes. The Wall Street Journal estimates that "a pair of S&P indexes tracking shares of software developers, financial data providers and stock exchanges collectively lost about $300 billion in market value."

In the US, a wave of sell-offs hit both specialized services and technology giants. Shares of analytics provider Thomson Reuters and legal services Legalzoom.com plummeted by 15.8% and 19.7% respectively. Among large software developers, Adobe (down 7.3%) and Salesforce (6.9%) suffered significant losses. PayPal (down 20.3%), Expedia Group (15.3%), EPAM Systems (12.9%), Equifax (12.1%) and Intuit (10.9%) were also among the outsiders of the day.

The sell-off also hit investment funds that were actively invest ing in software developers. Shares of Blue Owl Capital fell by 13%, to their lowest level since 2023. Shares of Ares Management, KKR and TPG lost more than 10% in the course of trading, while Apollo Global Management and Blackstone dropped 8%.

On February 4, the collapse spread to Asian markets. In India, shares of software market leader Tata Consultancy Services fell by 6%, while Infosys lost 7.1%. In Australia, quotes of cloud accounting developer Xero collapsed by 16% - a record drop since 2013. Meanwhile, Asia's broader technology sector showed resilience thanks to chip makers, who remain the beneficiaries of the AI boom, according to Bloomberg.

"This year will be a defining year as to whether companies turn out to be beneficiaries or victims of AI, and a key skill [for investors] will be how to avoid the losers," says Stephen Yiu, chief investment officer of the Blue Whale Growth fund. According to him, "until the dust settles, standing in the way of AI is a dangerous strategy."

Morgan Stanley analysts led by Tony Kaplan said in a note on Thomson Reuters, "Anthropic has launched new capabilities for its Cowork tool for the legal sector. We view this as a sign of increased competition and therefore potentially negative [for Thomson Reuters]."

B. Riley Wealth Management's Art Hogan pointed to the speed of change: "If things move as fast as we're hearing from OpenAI and Anthropic, this is going to be a problem." Investors are starting to get rid of securities of any companies whose business may be disrupted by new technologies, and this puts application software developers of all types at risk, the expert added.

There are other signs that software vendors are beginning to lag behind their competitors in the technology sector, Bloomberg writes. According to the agency, in the current reporting season only 71% of software vendors from the S&P 500 index managed to exceed market expectations in terms of revenue, while in the technology sector as a whole this figure is 85%.

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