Stock market today: S&P 500, Nasdaq edge up after tech sell-off with Google's AI push in focus
There have been many AI-driven selloffs in the three years since ChatGPT burst into the mainstream. Nothing, though, quite rivals the rout rippling through stock and credit markets this week.
For one, there’s the sheer speed and breadth of it. In the span of two days, hundreds of billions of dollars were wiped off the value of stocks, bonds and loans of companies big and small across Silicon Valley. Software stocks were at the epicenter, plunging so much that the value of those tracked in an iShares ETF has now dropped almost $1 trillion over the past seven days.
For another, this drubbing, unlike many previous ones, was triggered not by fears of a bubble but rather concern that AI is on the verge of supplanting the business models of a wide swathe of companies that doomsayers have long predicted were at risk.
“I don’t think it is an overreaction,” said Michael O’Rourke, chief market strategist at Jonestrading. “For two years, we have been talking about how AI is going to change the world and that it is a multi-generational technology. In the past few weeks, we have seen signs of it in practice.”
The spark was innocuous on its face: AI startup Anthropic PBC (ANTH.PVT) released a new tool for legal work, like reviewing contracts. On its own, the product isn’t seen as a game-changer — yet. But coming after a year in which Anthropic’s coding tools helped transform software development — part of a broader wave of AI innovation — the four-paragraph launch announcement was taken extremely seriously.
“While today it’s legal tech, tomorrow it might be sales or marketing or finance,” wrote Jackson Ader, an analyst at KeyBanc.