Anthropic's AI Automation Tool Sparks Massive $285 Billion Stock Market Selloff
A newly released AI automation tool from Anthropic PBC has triggered a dramatic $285 billion rout across stock markets, sending shockwaves through software, financial services, and asset management sectors. Investors raced to dump shares with even minimal exposure to potential AI disruption, creating one of the most significant single-day declines in recent memory.
Software and Financial Services Bear the Brunt
The selloff manifested most visibly in specialized indices tracking vulnerable sectors. A Goldman Sachs basket of US software stocks plunged 6%, marking its largest one-day decline since April's tariff-fueled market turmoil. Simultaneously, an index of financial services firms tumbled nearly 7%, reflecting widespread anxiety about automation's impact on traditional financial operations.
The broader technology market felt the pressure too, with the Nasdaq 100 Index falling as much as 2.4% during trading before paring losses to close down 1.6%. This volatility underscores how AI developments are becoming critical market-moving events that transcend individual companies.
Pre-Market Trigger and Global Impact
The dramatic selloff began even before US markets officially opened, with traders pointing directly to Anthropic's website announcement as the catalyst. This triggered immediate steep declines in shares of prominent companies including credit and marketing services firm Experian Plc, business and legal software maker RELX PLC, and the London Stock Exchange Group Plc.
In North America, Thomson Reuters Corp. and Legalzoom.com Inc. were among the worst performers, helping push the iShares Expanded Tech-Software Sector ETF down 4.6%. This marked the ETF's sixth consecutive day of declines, coming off a brutal January that saw it plunge 15% - its worst monthly performance since the 2008 financial crisis.
Investor Psychology and Sector Vulnerability
"This year is the defining year whether companies are AI winners or victims, and the key skill will be in avoiding the losers," observed Stephen Yiu, Chief Investment Officer of Blue Whale Growth Fund. "Until the dust settles, it's a dangerous path to be standing in the way of AI."
This sentiment reflects growing investor recognition that AI represents both unprecedented opportunity and existential threat across multiple industries. The market reaction suggests investors are increasingly unwilling to wait for concrete evidence of disruption before adjusting their portfolios.
Business Development Companies Hit Hard
The selling pressure extended to business development companies (BDCs), which provide a real-time window into the otherwise opaque direct-lending market. Blue Owl Capital Corp. fell as much as 13%, marking a record ninth-straight decline that dragged the stock to its lowest level since 2023.
Major alternative asset managers weren't spared either. Ares Management Corp., KKR & Co., and TPG Inc. each fell by more than 10% at various points during trading, while Apollo Global Management Inc. and Blackstone Inc. dropped by as much as 8%. These declines highlight how AI disruption fears are permeating even traditionally stable financial sectors.
Anthropic's Unique Position in Legal AI
Anthropic stands apart in the crowded legal AI startup landscape because it builds its own foundational models that can be customized for specific industry needs. While startups like Legora and Harvey AI have been developing legal automation tools for years, Anthropic's position as a major model developer gives it unique advantages.
The company's newly announced legal tool promises to automate work like contract reviewing and legal briefings, though its website cautions that "all outputs should be reviewed by licensed attorneys." This capability positions Anthropic to potentially disrupt both traditional legal information services and newer AI-focused legal startups simultaneously.
Analyst Perspectives and Competitive Landscape
"Anthropic launched new capabilities for its Cowork to the legal space, heightening competition," wrote Morgan Stanley analysts including Toni Kaplan in a research note focused on Thomson Reuters. "We view this as a sign of intensifying competition, and thus a potential negative."
This isn't Anthropic's first market-moving announcement. The company's January release of its Claude Cowork tool similarly boosted investor jitters about AI-related risks to software businesses. Other tech giants are contributing to the anxiety - video-game stocks suffered last week after Alphabet Inc. began rolling out Project Genie, which creates immersive worlds from text or image prompts.
Broader Software Sector Underperformance
The selloff highlights broader concerns about software companies lagging their technology sector peers. According to Bloomberg-compiled data from the current earnings season, just 71% of software companies in the S&P 500 have beaten revenue expectations, compared to 85% for the overall technology sector.
This performance gap suggests investors may be re-evaluating software companies' ability to adapt to the AI revolution, potentially leading to more sector-specific volatility as AI capabilities continue advancing at breakneck pace.
