Home / Business and Economy / AI Tool Sparks $285 Billion Stock Market Plunge
AI Tool Sparks $285 Billion Stock Market Plunge
5 Feb
Summary
- New AI tool from Anthropic caused a $285 billion stock market decline.
- Software, financial services, and asset management sectors were heavily impacted.
- Asian software stocks also slid, with Indian IT companies affected.
A significant market downturn occurred on Tuesday, with a new AI automation tool from Anthropic PBC causing a $285 billion rout across software, financial services, and asset management stocks. Investors reacted swiftly, dumping shares with even slight exposure to AI disruption fears.
The sell-off began before the US market opened, impacting major companies like Experian Plc and RELX PLC. Asian software stocks followed suit, with Indian IT companies such as Tata Consultancy Services Ltd. and Infosys Ltd. seeing sharp declines. This volatility underscores investor apprehension about AI's evolving impact on various industries.
Goldman Sachs' basket of US software stocks dropped 6%, and an index of financial services firms tumbled nearly 7%. The Nasdaq 100 Index also experienced a notable decline. The event illustrates a critical period for companies to navigate the AI landscape, distinguishing potential winners from those vulnerable to disruption.
Business development companies were also affected, with shares of firms like Blue Owl Capital Corp. falling significantly. The fears of AI disruption are extending to credit markets, impacting software loans. Major investment firms including Ares Management Corp. and KKR & Co. saw their stock prices drop substantially.
Anthropic's new capabilities, particularly its legal tool, intensify competition in the AI sector. This development is viewed by analysts as a sign of increasing market pressure. Another recent AI release from Anthropic, Claude Cowork, had previously contributed to investor jitters in the software sector.
