Anthropic’s AI Tool Triggers $285 Billion Market Selloff, Raising Fears of Industry Disruption

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A newly launched artificial intelligence automation tool from Anthropic PBC has sent shockwaves through global financial markets, triggering a massive $285 billion selloff across software, financial services, and asset management sectors. The dramatic reaction highlights growing investor anxiety over AI’s disruptive power and signals a pivotal moment for industries grappling with rapid technological change.
A Sudden Market Rout
The selloff began even before US markets officially opened, as traders reacted swiftly to the announcement on Anthropic’s website unveiling a legal-focused AI plugin. The tool is designed to automate complex tasks such as contract reviews and legal briefings—work traditionally handled by highly paid professionals.
Investors quickly dumped shares of companies perceived to be vulnerable to AI-driven disruption. A Goldman Sachs basket of US software stocks fell 6%, marking its largest single-day decline since April’s tariff-related selloff. Meanwhile, an index tracking financial services firms plunged nearly 7%.
The technology-heavy Nasdaq 100 also dropped sharply, falling as much as 2.4% during trading before recovering slightly to close down 1.6%. The scale and speed of the decline underscored how sensitive markets have become to developments in artificial intelligence.
Legal and Data Firms Among the Hardest Hit
Several major companies experienced steep losses as traders reassessed their long-term prospects in an AI-dominated future. Shares of Experian Plc, RELX Plc, and London Stock Exchange Group Plc all declined significantly after the release.
In North America, Thomson Reuters Corp. and LegalZoom.com Inc. were among the worst performers. Their weakness dragged down the iShares Expanded Tech-Software Sector ETF by 4.6%, extending a six-day losing streak. The ETF had already fallen 15% in January—its worst monthly performance since the 2008 financial crisis.
The ripple effects were not limited to software companies. Business development companies (BDCs), which provide financing to middle-market firms, were also caught in the downturn. Blue Owl Capital Corp. dropped as much as 13%, marking its ninth consecutive decline and pushing the stock to its lowest level since 2023.
Major investment firms—including Ares Management, KKR, and TPG—each tumbled more than 10% at one point, while Apollo Global Management and Blackstone fell up to 8%. These declines reflected fears that AI could weaken the value of software-related loans and reshape credit markets globally.
Investors Brace for an AI Divide
Market experts suggest that 2026 could become a defining year separating corporate “AI winners” from “AI losers.”
“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, chief investment officer at Blue Whale Growth Fund. “Until the dust settles, it’s a dangerous path to be standing in the way of AI.”
Such comments capture the growing belief that artificial intelligence is no longer a distant threat but an immediate force capable of transforming business models overnight.
Intensifying Competition in the Legal Sector
Anthropic is far from alone in targeting the legal industry. Over the past two years, investors have poured billions into startups promising to streamline legal workflows with AI.
Harvey AI, for example, reached a valuation of $5 billion in June, while Legora secured funding at a $1.8 billion valuation in October. These companies focus on reducing routine tasks for lawyers, potentially saving firms significant time and money.
However, Anthropic holds a distinct advantage: it develops its own foundational AI models rather than relying on third-party technology. This allows the company to tailor solutions for specific industries while simultaneously challenging both traditional legal data providers and newer AI startups that depend on external models.
Legora and similar firms often rely on models created by developers like Anthropic, placing them in a potentially vulnerable position if model makers decide to compete directly.
What the Tool Can Do
According to Anthropic’s plugin website, the legal AI tool can automate labor-intensive processes such as reviewing contracts and preparing legal briefs. Still, the company cautions that “all outputs should be reviewed by licensed attorneys,” acknowledging that human oversight remains essential.
Morgan Stanley analysts described the launch as evidence of intensifying competition. In a research note focused on Thomson Reuters, analyst Toni Kaplan and her team warned that the new capabilities could pose a “potential negative” for established providers of legal information and services.
Mounting AI Jitters Across Industries
The legal tool is not the only development fueling investor unease. In January, Anthropic introduced its Claude Cowork platform, further heightening concerns about AI’s growing capabilities.
Other technology giants are contributing to the turbulence. Alphabet recently began rolling out Project Genie, a system capable of generating immersive virtual worlds from simple text or image prompts. The announcement rattled video-game stocks, demonstrating how AI innovations can disrupt multiple sectors simultaneously.
These rapid advancements are forcing investors to reconsider valuations across the technology landscape. Companies once seen as secure may now face existential threats if AI can replicate their core services more efficiently.
A Turning Point for Markets
The sharp selloff illustrates a broader shift in market psychology. Rather than viewing AI purely as a growth catalyst, investors are increasingly treating it as a disruptive force that could dismantle established industries.
While automation promises efficiency and cost savings, it also raises questions about job displacement, competitive pressures, and the sustainability of existing business models.