Wall Street is gripped by concerns about AI disruption. It first started with investors dumping shares of software companies, but quickly spread to sectors seen as vulnerable to automation, leading to sharp losses in US stocks this week.
The AI fear trade did not even spare sectors such as private credit, real estate agents, data analytics, legal services and insurers.
Global tech stocks took a hit after Anthropic unveiled a legal AI plugin. But investor unease soon grew after a wave of AI model upgrades and new releases.
“With fear driving market sentiment, investors remain in ‘sell first, think later’ mode, wondering ‘who’s next’ and showing no mercy for anything remotely perceived as an AI loser,” said Barclays equity strategist Emmanual Cau.
Here’s how different sectors were affected by the sell-off:
Software and software-exposed loans
The S&P 500 Software & Services Index has lost about $2 trillion in value since its peak in October. Half of the losses came in the past two weeks, amid concerns that rapidly advancing AI tools could upend traditional subscription and enterprise tools.
The worst-performing Nasdaq 100 stocks this year include Atlassian, down 47%, Intuit, down 40%, and Workday, which has lost a third of its value.
Salesforce is down about 30% in 2026, while Adobe is down 25% and CrowdStrike is down 12%.
“There is this idea that in the near term, AI will somehow replace built-in models — models that have been around for many years and from which companies have greatly benefited,” says Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
The U.S. software sector’s worst decline in more than three years also sent shares of alternative asset managers plunging, amid concerns about their exposure to loans and debt burdens tied to the companies.
Ares, Blackstone, Blue Owl, Apollo, TPG and KKR are down between 13% and 24% this year.
According to BNP Paribas estimates, around a fifth of private credit is exposed to the software sector.
Financial brokerage, data analysis and legal services
The financial sector, especially brokers and data analytics firms, has been grappling with the introduction of AI-based tax planning features, fueling fears that rapidly advancing technology would upend their business models.
Shares of brokers LPL Financial, Raymond James Financial and Charles Schwab fell more than 7% on Tuesday.
Index provider S&P Global, which issued a bleak earnings forecast for 2026, is down more than 25% in February and is set for its worst month since 2009. Moody’s, Factset Research and MSCI also fell sharply this month.
Thomson Reuters’ Nasdaq-listed shares hit a near five-year low last week on concerns that AI would hurt legal services.
Real estate services
Commercial real estate and investment managers took a hit on Wednesday, which KBW analysts said was due to investors moving away from expensive, labor-intensive business models seen as potentially vulnerable to AI-induced disruption.
CBRE Group and Jones Lang LaSalle each fell about 12% on Wednesday, while Cushman & Wakefield fell almost 14%. CoStar Group, owner of Apartments.com and Homes.com, fell 5.9%.
“We view market concerns as overblown due to a combination of fragmented CRE end markets and the non-core nature of real estate businesses for many clients,” said Morningstar analyst Sean Sunlop, noting that their valuations were “not cheap” despite the sell-off.
Insurance
Insurance stocks took a big hit. Brokers and insurers on both sides of the Atlantic tumbled after online platform Insurify released an AI-powered comparison tool on ChatGPT on Monday, allowing users to compare car insurance rates.
The S&P 500 insurance index fell 3.9% on Monday, the biggest single-day drop since mid-October.
Shares of insurance broker Willis Towers Watson are down 15% so far this week and could be heading for their worst week since the pandemic sell-off in March 2020. Aon fell 9% and Arthur J. Gallagher fell 15% this week.
“Ultimately, we believe brokers will split. Simpler insurance products such as term life, personal auto and home insurance could see significant AI disruption over the next five years,” said Morgan Stanley equity strategist Bob Jian Huang.
“Higher-rated brokers will use AI to enhance analytics and improve underwriting, and not be displaced by it, in our view.”
Truck transport and logistics
Traders probably didn’t see trucking and logistics companies as an AI target, but the sector fell sharply on Thursday.
AI-focused logistics company Algorhythm Holdings, which previously sold karaoke machines, said its SemiCab unit increased customer freight volumes by 300% to 400% “without a corresponding increase in operating headcount.”
The news caused stocks like Landstar System and CH Robinson to plummet. The Dow Jones Transportation Average fell 4.4%.
However, Jefferies analysts said the reaction was disconnected from fundamentals. “Private freight data and physical networks remain sustainable moats,” they said.
(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Additional reporting by Avinash P; Editing by Arun Koyyur)
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