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AI Scare Trade: Tech Stocks Plunge Amidst Disruption Fears
24 Feb
Summary
- AI fears trigger a market sell-off, impacting delivery and software firms.
- IBM shares experienced their worst drop in 25 years, down 13%.
- A new report warns of escalating volatility and potential bankruptcies in the software sector.
The artificial intelligence "scare trade" intensified on Monday, causing widespread concern about AI's disruptive capabilities. This led to a significant drop in shares for delivery, payments, and software companies, with International Business Machines Corp. (IBM) experiencing its worst plunge in 25 years, closing down 13%.
The market turmoil was fueled by a bearish report from Citrini Research, which outlined potential risks to various economic segments using hypothetical future scenarios. Additionally, AI startup Anthropic's announcement about its Claude Code tool aiding in modernizing COBOL, a programming language predominantly used by IBM, contributed to the market's unease.
Nassim Taleb, author of "The Black Swan," further cautioned investors to prepare for escalating volatility and potential bankruptcies in the software sector as the AI rally enters a fragile phase. Companies like DoorDash, American Express, KKR & Co Inc., and Blackstone Inc. all saw their shares decline by at least 6%, while Uber Technologies Inc., Mastercard Inc., and Visa Inc. fell by 4% or more.
While the Citrini report explicitly stated it was a scenario, not a prediction, it highlighted potential disruptions to industries including food delivery and payment processing. This added to existing anxieties in a stock market already sensitive to AI disruptions and geopolitical events, prompting a broad sell-off across various tech-related sectors.
