From Bloomberg, February 3:
A new AI automation tool from Anthropic PBC sparked a $285 billion rout in stocks across the software, financial services and asset management sectors on Tuesday as investors raced to dump shares with even the slightest exposure.
A Goldman Sachs basket of US software stocks sank 6%, its biggest one-day decline since April’s tariff-fueled selloff, while an index of financial services firms tumbled almost 7%. The Nasdaq 100 Index fell as much as 2.4% at one point before trimming losses to 1.6%.
The selloff started before the US market opened as traders pointed to a release on the Anthropic website as the reason behind steep declines in the shares of credit and marketing services company Experian Plc, business and legal software maker RELX PLC and the London Stock Exchange Group Plc.
Asian software stocks also slid, with shares of Indian information technology companies the latest to buckle. Bellwether Tata Consultancy Services Ltd. sank as much as 6%, while Infosys Ltd. dropped 7.1%. Cloud-based accounting software maker Xero Ltd. fell as much as 16% in Sydney trading, the most since 2013. Asia’s broader tech sector showed some resilience as it remains dominated by hardware makers — particularly chipmakers — that have been key beneficiaries of the AI investment boom.
Thomson Reuters Corp. and Legalzoom.com Inc. were among the worst performers in the US and Canada, pushing the iShares Expanded Tech-Software Sector ETF down 4.6%, its sixth consecutive day of declines. The ETF is coming off a 15% plunge in January, its worst month since 2008.
“This year is the defining year whether companies are AI winners or victims, and the key skill will be in avoiding the losers,” said Stephen Yiu, CIO of Blue Whale Growth Fund. “Until the dust settles, it’s a dangerous path to be standing in the way of AI.”
Shares of business development companies were caught in the selling, with Blue Owl Capital Corp. falling as much as 13% for a record ninth-straight decline that dragged the stock to the lowest since 2023. Fears of disruption have rattled credit globally, sending software loans in the broadly syndicated market lower last week. As publicly traded entities, BDCs provide a real-time window into the otherwise opaque direct-lending market.
Ares Management Corp., KKR & Co. and TPG Inc. each fell by more than 10% at one point, while Apollo Global Management Inc. and Blackstone Inc. dropped by as much as 8%.
Anthropic is part of a rash of AI startups developing tools for the legal industry. Long before Anthropic’s plugin, startups including Legora and Harvey AI were flooding the legal industry with tools they say will save lawyers from grunt work. Investors have been pouring money into AI products for the legal industry for more than two years....
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