Anthropic, an artificial intelligence company, has unveiled Claude Cowork, an AI-powered assistant engineered to perform a variety of tasks traditionally handled by software applications. This AI colleague is capable of reading documents, organizing digital folders, and drafting written content autonomously, streamlining workflows across different professional environments.
On Friday, Anthropic augmented the capabilities of Claude Cowork with new plugins fashioned for explicit industry functions, including sales, financial services, data marketing, and legal fields. These specialized extensions were designed to provide customized assistance within each vertical, intensifying the user experience by integrating AI directly into key operational areas.
The introduction of these AI plugins ignited immediate turbulence in stock markets, particularly within the software sector. Investors exhibited pronounced anxiety regarding the sustainability of the software-as-a-service (SaaS) business model, which has historically been foundational to the technology and digital services industries. The concern centers on the possibility that AI-driven tools like Claude Cowork could supplant multiple existing software solutions by automating complex tasks more efficiently and cheaply.
Wall Street’s apprehension is rooted in the potential for AI innovations to undercut demand for traditional data analytics and research products offered by established software companies. As corporations increasingly deploy AI to develop internal tools and automate processes, their reliance on subscriptions to external research, analytics, and specialized software services may dwindle, posing a threat to software companies' revenue streams.
The extent to which AI platforms will reshape or diminish the software marketplace is not yet definitive. However, the immediate effects were apparent on Tuesday, with equity sell-offs hitting a broad range of software and professional services companies within the legal and financial sectors.
Thomas Shipp, who heads equity research at LPL Financial, highlighted in a recent analysis that AI’s evolving capabilities reduce the necessity of paid software. He noted, "Why do I need to pay for software, the thinking goes, if internal development of these systems now takes developers less time with AI?" He further emphasized that products like Anthropic’s Claude Cowork, which can read and edit organizational files, empower even less technically specialized users to bypass traditional workflows and software tools.
The market response was stark. An exchange-traded fund tracking the software industry dipped 5.69% on Tuesday, marking its most significant daily decline since April, followed by another 1% decrease on Wednesday. Key software and service firms experienced record single-day losses, with Thomson Reuters plunging 15.83% and LegalZoom.com tumbling 19.68% on Tuesday. Both companies saw modest recoveries on Wednesday, rebounding slightly as some investors perceived these dips as buying opportunities.
European markets resonated with this downturn as well. RELX, a London-based conglomerate owning legal tech and data analytics firm LexisNexis, suffered a 14% drop on Tuesday and remained down by 1.5% the following day. Equity analysts like Toni Kaplan from Morgan Stanley attributed this sell-off to investor fears that AI-native enterprises could penetrate the legal technology industry, challenging dominant incumbents such as Thomson Reuters and RELX.
The ripple effect of AI-driven apprehensions extended beyond software providers, impacting companies associated with financial data and research services. FactSet declined by over 10%, and shares of Blue Owl, a financial firm with stakes in software companies, fell nearly 10% on Tuesday alone.
These market movements have heightened existing concerns about employment disruptions attributable to AI advancements. Anthropic’s CEO, Dario Amodei, has publicly cautioned that AI could induce "unusually painful" workforce upheavals, with estimates suggesting that as many as 50% of entry-level white-collar positions might be displaced within the next one to five years. This forecast stands in contrast to other industry voices who anticipate more modest alterations to job markets.
Salesforce, a prominent software company, exemplifies the ongoing challenges facing the sector, with its stock price declining 26% year-to-date, ranking it as one of the Dow Jones Industrial Average’s worst performers. CEO Marc Benioff indicated last year that AI tools would obviate the need to hire additional software engineers, customer service representatives, or legal personnel, underscoring how AI is already influencing corporate labor strategies.
Despite the recent market volatility prompted by Anthropic's launch, some experts contend that the extent of the software stock sell-off may be disproportionate. Historical instances, such as when Chinese AI entity DeepSeek introduced affordable general AI models last year, caused precipitous market value declines—for example, Nvidia lost nearly $600 billion. Yet, DeepSeek's presence did not ultimately yield the widespread industry upheaval initially feared; Nvidia has since resumed significant market gains, momentarily achieving a $5 trillion valuation in October.
Nick Dempsey, director of media equity research at Barclays, expressed skepticism regarding the ability of generalized AI models to fully substitute for specialized, industry-specific knowledge. Research analysts at Aurelion Research categorized the recent software sell-off as predominantly sentiment-driven, rooted in uncertainties surrounding AI's evolving role. They anticipated normalization of market reactions over time, once enterprises begin to demonstrate quantifiable returns from AI integration.