The value of software and data stocks wipes off $300 billion as the threat of new AI tools spreads to the European markets and hits firms such as the London Stock Exchange Group (LSEG) and RELX. Investors pointed to the recently updated artificial intelligence chatbot by Anthropic as the main culprit.
AI developer Anthropic launched plug-ins for its Claude Cowork agent on January 30. The plugins were designed to automate tasks across legal, sales, marketing, and data analysis. According to traders and analysts, this move has sparked worries of an impending AI-fueled disruption of the data and professional services industry that was once viewed as a major beneficiary of the AI era.
Sharp Selloff in Software and Stocks
Shares of the RELX Plc and Wolters Kluwer NV fell more than 10%, Experian Plc dropped 9%, while the LSEG Plc, Legalzoom.com Inc., and FactSet Research Systems Inc slid around 10% or more. The iShares Expanded Tech-Software Sector ETF fell as much as to 4.4%, and a UBS Group AG basket of European stocks is seen as vulnerable to the AI disruption, sinking nearly 7%, the biggest one-day decline since the tariff-fueled selloff in April. Toronto-based Thomson Reuters, which owns the Westlaw legal database, slumped by nearly 18%, putting it on track for its biggest daily loss on record and its lowest close since June 2021. The Nasdaq 100 index fell as much as 2.4% at one point before trimming losses 1.6%.
The CIO of Blue Whale Growth Fund, Stephen Yiu, said that this year will be a defining year for companies, as they are either AI winners or AI victims, adding that the key skill will be in avoiding the losers. He also added that it is dangerous to stand in the way of AI until we tackle the measures to coexist with it (Economic Times).
AI Concerns Spreads Over
Morgan Stanley analyst Toni Kaplan lewrote in an investor note that most of the investors have responded overwhelmingly bearish on the TRI as the investors fear that the company will be unable to maintain the growth within its legal segment, facing increasing competition from the specialized AI tools (Reuters).
Advertising companies were also under pressure. Shares of New York-based Omnicom dived 11.2 per cent while France’s Publicis fell more than 9 per cent after the company’s results. Publicis is the world’s largest advertising group by market cap. The firm reports that it had earmarked approximately $1.35 billion for acquisitions this year, centering on AI-powered technologies and data assets.
Other companies that relied heavily on the advertising field were also hammered. Pinterest closed the session down 5.6 per cent, and Snap fell 8.4 per cent. Bitcoin also tumbled sharply because of a resumption of large-scale selling. According to the data from CNBC, Bitcoin fell over 6% to $72,884.38 per coin, which is the lowest level since November 6, 2024. It was recovering from some losses just before this drastic bearish moment. Meanwhile, gold and silver prices rebounded despite high volatility.
