AI assistant triggers fears across software industry

Anthropic launched Claude Cowork, an AI assistant that works like a digital teammate, helping users read files, organize documents, and complete everyday office tasks.

The tool quickly worried investors, heightening fears that artificial intelligence could replace costly software by companies and disrupt the tech industry.  New plugins for sales, finance, marketing, and legal teams aim to replace many traditional software tools.

Investors fear companies may cut back on costly software subscriptions if AI can handle the same work faster and cheaper. Software now makes up about 20% of investments in business development companies, double 2016 levels.

That worry hit stocks hard. A global sell-off in software stocks continued for a second day yesterday, after nearly $300 billion in market value was erased on Tuesday.

A software industry exchange-traded fund fell 5.69% Tuesday, its worst day since April.

Legal-tech providers led the decline. Shares of Thomson Reuters fell 15.8%, LegalZoom dropped 19.7%, and the London Stock Exchange slid 12.8%.

S&P Global sank 11% on Tuesday, its steepest decline since the start of the pandemic. London Stock Exchange Group fell 6% yesterday after plunging 13% on Tuesday.

The selling soon spread. PayPal plunged 20.3%, Expedia lost 15.3%, and Intuit, Equifax, and EPAM each fell more than 10%.

Broader markets held steadier. The Nasdaq slipped 1.4%, the S&P 500 lost 0.8%, and the Dow fell 0.3%.

Uncertain long-term impact
Some analysts warn that AI could disrupt jobs and reduce demand for entry-level white-collar roles. However, others say the sell-off may be driven more by fear than facts, noting that AI still lacks deep, industry-specific expertise.

For now, uncertainty dominates. Claude Cowork shows AI’s growing power, but investors still debate how much it will truly reshape the software industry.