AI Fears Trigger Historic Stock Market Sell-Offs as New Tools Spark Disruption Concerns

Bankers' Winter Getaway to Sunny Florida Is Upended By AI Chaos

Some Wall Street professionals believe the selling reflects a knee-jerk reaction and may be overestimating the actual risk from AI, while others think investors need to differentiate between companies that are truly at risk and those that should be fine. It was supposed to be a relatively relaxing work week in the South Florida sun for the hundreds of bankers, brokers, advisers, portfolio managers, analysts and investors attending a series of financial industry conferences from Miami to Boca Raton. Then AI crashed the party. As traders dumped financial services stocks on Tuesday due to mounting fears that new artificial intelligence tools threaten the businesses as we know them, Patrick Lemmens, an executive director at Robeco Group and 30-year investing veteran, was wandering from meeting to meeting at the UBS Financial Services Conference in Key Biscayne, watching the chaos unfold on mobile phones and computer screens. Lemmens, who's based in Rotterdam, The Netherlands, said he "did not come to Miami with the idea that every other day there would be another part of the financial services space getting killed." But that's basically what happened. It's a continuation of a trend that's been unfolding over the past few weeks, as AI worries have consumed nearly every part of the financial sector. Wealth managers, insurance brokers, big banks, boutique advisers, financial data providers and even exchanges have all taken a hit. The S&P 500 Financials index declined 4.8% this week and the KBW Bank Index sank 5.5%, for both the biggest weekly loss since the tariff freakout last April. Get the Bonus Points newsletter. Get the Bonus Points newsletter. Get the Bonus Points newsletter. Go in-depth on Bloomberg's games, Pointed and Alphadots, with quizmaster Aimee Lucido. Go in-depth on Bloomberg's games, Pointed and Alphadots, with quizmaster Aimee Lucido. Go in-depth on Bloomberg's games, Pointed and Alphadots, with quizmaster Aimee Lucido. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. The culprit on Tuesday was a tool unveiled by technology startup Altruist Corp. that helps financial advisers personalize strategies for clients and create pay stubs, account statements and other documents. On Monday, investors unloaded insurance brokerage stocks after the online marketplace Insurify rolled out a new application that uses OpenAI's ChatGPT to compare auto-insurance rates. That came on the heels of a new model released last week by Anthropic that's aimed at automating financial research and legal services, triggering selloffs in those stocks. Moving between conferences, attendees sporting red Bank of America Corp. wrist bands and white UBS lanyards sought answers from executives who were just as confused as them about what this all means. "You try to get back to the meetings and ask the various companies you are talking to in the various parts: the alts, the banks, investment banks, the insurance brokers, the wealth managers," Lemmens said. "You get sort of sucked into everybody asking the same question. What's your software exposure? What are you doing with AI? What is the danger of AI?" "And then everybody also giving the same answer, our exposure to software is not that big and not all the companies are going to be killed," he added. "You get a lot of that response. And then you look at the markets and the markets obviously are totally of a different opinion." As the stocks sank, executives were forced to defend their positions on the fly, since they were primarily there to discuss their solid earnings and strong deal pipelines until AI disruption stepped in and stole the show. "I think AI is gonna enhance the quality of advice and it's gonna help advisers scale and be able to serve more clients more effectively with the same set of resources," Jed Finn, Morgan Stanley's head of wealth management, said at the UBS conference. Morgan Stanley shares lost 4.9% on the week. Goldman Sachs Chief David Solomon kicked off the event on Tuesday before wealth manager stocks slumped. He reiterated expectations for strength in capital markets activity and said the US economy remains poised for strong growth this year. His comments on AI were focused on declines in software stocks, which he thought were overdone. One strange dynamic of the selloffs is that while these AI tools will likely hurt financial services employment, they actually should help the firms improve their profits and margins. For example, UBS insurance analyst Brian Meredith said he came into the year thinking that AI would boost productivity for brokers. When the selloff was unfolding, he was moving between meetings and fielding calls from companies asking what was going on. "I would not have predicted what happened," he said. "In fact, if anything I'm actually more positive on the insurance brokers in 2026." Of course it wasn't just those defrosting in Florida who were being inundated with questions. Citizens analyst Devin Ryan was in his Manhattan office on a phone meeting with a flooded inbox and "a multitude of emails coming in, and every channel that I have that people can reach out to me is blowing up." "I was trading emails and Team messages and Bloomberg chats, and my phone was ringing," Ryan recalled. The investor reaction "shows that everything is on heightened fragility with AI headlines." However, many Wall Street pros warn that some of this steep selling reflects a knee-jerk reaction and could be overestimating the actual risk from the various AI uses and tools. "Call me skeptical," said Stephen Biggar, director of financial services research at Argus Research. "The market seems to react to these things, and then the use case is quite a bit different." The flip in sentiment on AI from growth tool to wrecker of industries started at the end of last year. The software industry in particular has been dogged by worries about what's coming. An index that tracks software stocks hit a peak on Sept. 22 and is down 30% since then, compared with a 2.1% rise in the S&P 500 Index. There has been a shift "to look at it from the lens of not what can AI do for this business to catapult it to the next level, but actually, you know, is there a risk that these businesses just simply don't exist in three or four years time," said Ken Barry, head of European private equity at the law firm White & Case. However, Barry thinks investors need to start differentiating the companies that are truly at risk from the ones that should be fine when everything calms down. "The reaction has been indiscriminate and frankly it needs to be much more differentiated," he said. "There is a bit of a sense at the moment that the public markets are no longer a benchmark for some of these assets because the market is just reacting so wildly to the news that's coming out."

From software to real estate, U.S. sectors under the grip of AI scare trade

Feb 13 (Reuters) - Wall Street is in the grip of disruption worries from AI. It first started with investors dumping shares of software companies but soon spread to sectors seen as vulnerable to automation, driving sharp losses in U.S. stocks this week. The AI scare trade did not spare even sectors such as private credit, real estate brokers, data analytics, legal services and insurers. Global tech stocks took the hit after Anthropic unveiled a legal AI plug-in. But soon the investor unease deepened following a flurry of AI model upgrades and fresh releases. "With fear driving market sentiment, investors remain in 'sell first think later' mode, asking 'who is next' and showing no mercy for anything remotely seen as an AI loser," Barclays equity strategist Emmanual Cau said. Here's a look at how various sectors were impacted by the selloff: SOFTWARE AND SOFTWARE-EXPOSED LOANS The S&P 500 Software & Services index (.SPLRCIS), opens new tab has lost about $2 trillion in value since its peak in October. Half of the losses came in the past two weeks, on concerns that fast-advancing AI tools could upend traditional subscription and enterprise tools. So far this year, the worst-performing Nasdaq 100 stocks include Atlassian (TEAM.O), opens new tab down 47%, Intuit (INTU.O), opens new tab down 40% and Workday (WDAY.O), opens new tab, which has lost a third of its value. Salesforce tumbled about 30% in 2026, while Adobe (ADBE.O), opens new tab is down 25% and CrowdStrike (CRWD.O), opens new tab 12%. "There's this idea that AI is somehow going to replace built‑out models in the near term - models that have been in place for many years and from which companies have profited strongly," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. The U.S. software sector's worst drawdown in more than three years also knocked down shares of alternative asset managers on concerns over their exposure to loans and leverage tied to the companies. Ares (ARES.N), opens new tab, Blackstone (BX.N), opens new tab, Blue Owl (OWL.N), opens new tab, Apollo (APO.N), opens new tab, TPG (TPG.O), opens new tab and KKR (KKR.N), opens new tab slumped between 13% and 24% this year. About a fifth of the private credit space is exposed to the software sector, according to estimates from BNP Paribas. FINANCIAL BROKERAGE, DATA ANALYTICS & LEGAL SERVICES The financial industry, particularly brokerages and data analytics firms, were hammered after wealth management firm Altruist introduced AI-enabled tax planning features, stoking fears of the fast-advancing technology upending their business models. Shares of brokers LPL Financial (LPLA.O), opens new tab, Raymond James Financial (RJF.N), opens new tab and Charles Schwab (SCHW.N), opens new tab fell more than 7% on Tuesday. Index provider S&P Global (SPGI.N), opens new tab, which issued a downbeat earnings forecast for 2026, has slumped more than 25% in February and was set for its worst month since 2009. Moody's (MCO.N), opens new tab, Factset Research (FDS.N), opens new tab and MSCI (MSCI.N), opens new tab also fell sharply this month. Nasdaq-listed shares of Thomson Reuters touched a near five-year low last week on concerns about AI hurting its legal services business. REAL ESTATE SERVICES Commercial real estate and investment managers took a blow on Wednesday, which KBW analysts said was due to investors rotating out of high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption. CBRE Group (CBRE.N), opens new tab and Jones Lang LaSalle (JLL.N), opens new tab sank about 12% each on Wednesday, and Cushman & Wakefield (CWK.N), opens new tab slumped nearly 14%. CoStar Group (CSGP.O), opens new tab, owner of Apartments.com and Homes.com, fell 5.9%. "We view market concerns as overstated due to a combination of fragmented CRE end markets and the noncore nature of real estate activities for many clients," Morningstar analyst Sean Sunlop said, noting that their valuations were "not cheap" despite the selloff. INSURANCE Insurance stocks took a sharp hit. Brokers and underwriters across both sides of the Atlantic plunged after online platform Insurify released on Monday an AI‑powered comparison tool on ChatGPT, which allows users to compare car insurance rates. The S&P 500 insurance index (.SPXIN), opens new tab slumped 3.9% on Monday, its biggest single-day drop since mid-October. Shares of insurance broker Willis Towers Watson (WTW.O), opens new tab have shed 15% so far this week and were set for its worst week since the pandemic-selloff in March 2020. Aon (AON.N), opens new tab fell 9% and Arthur J. Gallagher (AJG.N), opens new tab dropped 15% this week. "Ultimately, we believe brokers will bifurcate. Simpler insurance products like term life, personal auto, and home, could see significant AI disruption over the next five years," Morgan Stanley equity strategist Bob Jian Huang said. "Higher-valued brokers will use AI to enhance analysis and improve underwriting, not be displaced by it, in our view." TRUCKING & LOGISTICS Traders probably did not see trucking and logistics firms as an AI target, but the sector plunged sharply on Thursday. AI-focused logistics firm Algorhythm Holdings (RIME.O), opens new tab, which previously sold karaoke machines, said its SemiCab unit boosted customers' freight volumes by 300% to 400% "without a corresponding increase in operational headcount". The news triggered a rout in stocks such as Landstar System (LSTR.O), opens new tab and C.H. Robinson (CHRW.O), opens new tab. The Dow Jones Transportation Average (.DJT), opens new tab fell 4.4%. Jefferies analysts, however, said the reaction was disconnected from fundamentals. "Proprietary freight data and physical networks remain durable moats," they said. Reporting by Medha Singh and Sruthi Shankar in Bengaluru; additional reporting by Avinash P; Editing by Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab

What the truck just happened to transport stocks?

Only in America could a karaoke equipment supplier pivot seamlessly into AI-driven logistics. And only this week could a study published by such a company wipe apparently tens of billions of dollars off the value of some of the world's biggest airlines and freight brokers. Now obviously ascribing market moves to a single factor is a tricky business. But it seems to be what we're running with. CNBC: A new tool from AI company Algorhythm Holdings has made trucking companies the latest victim of the market's AI jitters, adding to the historic sell-off in software stocks and real estate companies. Bloomberg: Logistics stocks plunged on Thursday as the group became the latest victim of the artificial intelligence "scare trade." At the center of the selloff: a former karaoke company with a stock-market value of only $6 million. The little-known company is worth just a fraction of the value it knocked off of a constellation of others -- all of which were dumped by investors fearful of even the faintest threat posed by AI. The Wall Street Journal: The sell-off appears to have been sparked by a news release from a Florida firm called Algorhythm Holdings, which said its SemiCab unit had boosted customers' freight volumes more than 300% "without a corresponding increase in operational headcount." FT Alphaville found Algorhythm Holdings' head of investor relations in a state of amused confusion when we got in touch late on Thursday evening. "It's the biggest example of a tail wagging the dog ever," said an exhausted but upbeat Brendan Hopkins, fresh from a call with a panicked Wall Street transport analyst. The irony of a paper about supposedly transformative AI having been potentially picked up and run with by internet-combing algorithmic momentum strategies wasn't lost on him, either. "For all we know, AI is so self-supporting that it's going to find something every day that makes AI seem like the best thing in the world," Hopkins added. Algorhythm's share price ended the session up 30 per cent at $1.29, giving it a market cap of about $12mn. The violence of the sell-off its paper may have triggered across the rest of the freight sector can be summed up neatly by the following video of a SWAT team deathbot mauling an 18-wheeler*: Or, moderately less excitingly, this chart: Fears around what AI might do to [insert industry here] have gone into overdrive over the past two weeks as investors have for the time being ditched their admittedly wildly successful 'add leverage, buy everything' approach in favour of selling first and asking questions later. From MainFT: Traders have seized on developments by little-known start-ups, triggering waves of selling for shares of incumbent players in the traditional financial services industry and beyond, from Charles Schwab to CBRE. Trucking stocks joined the selling on Thursday over threats to their freight brokerage businesses. It's fair to say that Algorhythm -- née The Singing Machine, a world-leading purveyor of home karaoke systems -- didn't anticipate its white paper having quite the impact it seemingly did. If anything, the company's new AI product should have sent freight stocks higher, said chief executive Gary Atkinson: "Our platform is net positive for all logistics players on the platform (the shippers, the carriers, the [third-party logistics] and [logistics service providers]). Reducing empty miles, we save shippers on cost, we keep the carriers more productive (no wasted fuel, drivers getting paid to drive empty), and we also have the nice added benefit of saving a massive amount of CO2 emission and added congestion on [the] road." Asked by FTAV which song he'd pick to sing to capture his mood, Algorhythm's long-serving chief executive Gary Atkinson opted for a classic: "It's gotta be 'Don't Stop Believin' by Journey after how wild today has been. Always believe in yourself and good things happen."

Trucking and logistics stocks drop on release of AI freight scaling tool

Tractor trailers sit parked at a J.B. Hunt Transport Services Inc. facility in Columbus, Ohio. Shares of several trucking and logistics companies declined Thursday on fears that new artificial intelligence tools could slash major freight inefficiencies, leading to less demand for the industry's services. A new tool from AI company Algorhythm Holdings has made trucking companies the latest victim of the market's AI jitters, adding to the historic sell-off in software stocks and real estate companies. The notable market rotation has come as investors are increasingly scrutinizing traditional businesses that may not be able to keep up with rapid advancements in AI. Leading trucking and logistics stocks C.H. Robinson and RXO dropped more than 20% each during Thursday's session. J.B. Hunt Transportation Services declined about 9%, while XPO lost nearly 7.9% and logistics company Expeditors International of Washington fell nearly 16.5%. There's an "emerging debate around open-source automation agents such as Molt Bot that offer increased potential to automate routine back-office tasks and help equalize the technology playing field for smaller operators," said Baird analyst Daniel Moore in a note. He reiterated his outperform ratings on C.H. Robinson and Expeditors, saying "automation is not a new theme." Shares of Algorhythm, a penny stock before Thursday, popped about 31%, meanwhile. Algorhythm announced earlier this week that its SemiCab's platform, deployed with live customers, is allowing operators to scale freight volumes by 300% to 400% without increasing their headcount. According to its press release, the SemiCab platform reduces "empty freight miles" by more than 70% across active customer networks. The company said that trucks are driving empty nearly one out of every three miles and therefore lose more than $1 trillion in freight spending each year, citing data from Mordor Intelligence. "What we're proving with SemiCab is that when freight is managed as a coordinated network rather than isolated transactions, utilization improves dramatically. The substantial reduction in empty miles that we are able to achieve for our customers represents a fundamental shift in how logistics economics work," said Ajesh Kapoor, CEO of SemiCab. Separately, investors are watching to see how trucking companies could also be impacted by U.S. Transportation Secretary Sean P. Duffy's Wednesday ruling to prohibit, according to the announcement, "unqualified foreign drivers" from obtaining licenses to drive commercial trucks and buses. Duffy said that government reforms will seek to address safety concerns by preventing "foreign drivers" who have not undergone consular and interagency screening from receiving a commercial driver's license. Consular screening typically applies to non-U.S. citizens.

AI Fears Drive Volatility, Triggering Declines in Stock Market It Powered for Years

For three years, AI was the stock market's savior. Suddenly, it's become a marauder, and virtually no corner of the equity market looks safe from its impact. Just in the past 10 days, investors have delivered swift routs to companies toiling in industries as disparate as logistics, real estate, software, private credit, insurance and wealth management. In each case, the release of a new artificial intelligence tool, most famously from Anthropic PBC but also from small, lesser-known startups, prompted a rapid reassessment of business prospects. While some of the selling pressure eased Friday, major US averages are headed for a second week of losses. Financials have led the drop this week, along with makers of consumer discretionary products and technology firms. The Cboe Volatility Index remains above its long-term average, and investors are paying up for protection against more turbulence in the near-term. "All we have done and seen in the past few weeks is the market torch the perceived AI losers. Obviously the definition of AI losers is changing almost daily to the point where you can't track it via themes or baskets," said David Wagner, portfolio manager at Aptus Capital Advisors. The one constant is that AI applications have become the market's bogeyman, capable of erasing billions in value in a matter of hours as investors question the very viability of large swaths of the corporate landscape. The fear of disruption from AI is so high that even seemingly small announcements or product releases have led to sharp reactions for entire sectors. Take Thursday, where a tiny karaoke-turned-AI-logistics company issued a press release on a new AI tool and shares of CH Robinson Worldwide Inc. and Landstar System Inc. tumbled, taking the whole sector down with them. Days earlier, Charles Schwab Corp. and its ilk got hammered on news of a new wealth-advisory AI application. Tax-preparation firms look vulnerable, along with real estate groups -- and so they came in for a housing. The seeming randomness of the declines, along with the sheer breadth of what is getting hit has left investors with the feeling that any part of the market could be next. "The perception is spreading like a wildfire, and it's spreading horizontally," Joseph Shaposhnik, portfolio manager at Rainwater Equity, said. "In other words, it was once confined to a particular sector, and now it's spreading across sectors, the fear of the risk." Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. An increasingly uncertain macroeconomic backdrop is adding to the tension. Valuations are stretched across the board with the S&P 500 Index only two weeks removed from a record after three years of double-digit gains. President Donald Trump's ever-changing policies and ongoing tariff threats have added to volatility. Wall Street also is hyper-focused on labor market and inflation data for clues on the path for interest rates. There's some sense, visible in the ups-and-downs of the broader market, that the AI selloff is overdone, at least in its breadth. "People are extrapolating what's happened in the software sector to what's happening in other sectors of the economy. And I just don't know if that is a fair analogy," said Jim Thorne, chief market strategist at Wellington-Altus. "I think they're misplaced, I'll put it that way." Of course, the swift declines in shares cut both ways, offering investors a chance to buy the dip in companies they think have been unfairly punished and are now trading at enticing discounts. That may prove to be a more fruitful investment strategy than attempting to divine the market's next victims. "It's better for investors to focus on where are the opportunities," said JoAnne Feeney of Advisors Capital Management. "It's very hard to know what's going to be disrupted." Goldman Sachs Group Inc. this week rolled out a custom basket of stocks that attempts to navigate the upheaval in the software sector. The basket is a pair trade which goes long shares of companies whose businesses are seen as difficult for AI to displace, while simultaneously shorting firms whose workflows AI could increasingly disrupt. At the same time, it may take longer than hoped for beaten-down stocks to regain upward momentum after AI disruption-sparked selloffs, even if they report solid earnings that display healthy fundamentals. "Narratives take hold much longer than what many investors would think, and it takes a lot for the market to finally believe that those myths have been debunked," Wagner said. Stocks where "the market has kind of grabbed the narrative that they may be an AI loser, their stocks may be put in the penalty box for quite some time, even if they continue to execute over the next few quarters," he said.

Logistics Stocks Sink as AI Fear Trade Finds Latest Victim

The selloff is part of a broader trend of investors fearing the disruptive power of AI, with other industries such as real estate, software, and insurance also being affected by the "AI scare trade". Logistics stocks plunged on Thursday as the group became the latest victim of the artificial intelligence "scare trade." At the center of the selloff: a former karaoke company with a stock-market value of only $6 million. The little-known company is worth just a fraction of the value it knocked off of a constellation of others -- all of which were dumped by investors fearful of even the faintest threat posed by AI. The company's trumpeting of its logistics platform sent the Russell 3000 Trucking Index sliding 6.6%. CH Robinson Worldwide Inc. tumbled 15% -- and at one point was down by a record 24% -- while Landstar System Inc. fell 16%. It was the worst drop for the sector since April's trade-war market meltdown. Drug distribution stocks were also caught up in the selloffBloomberg Terminal, with McKesson Corp. and Cardinal Health Inc. both sliding about 4%. The chief executive officer of the karaoke-turned-AI company was among those left shocked by the market action. "Never in my wildest dreams would I ever have imagined a day like today," said Gary Atkinson, CEO of Algorhythm Holdings Inc. "It's almost like David versus Goliath." The latest companies to be swept up in the selling join real estate firms, software makers, private credit providers, insurance brokerages and wealth managers among the industries battered in recent sessions by fears of AI's disruptive power. Thursday's losses came amid a broader risk-off move in markets that saw the Nasdaq 100 Index tumble 2%, while gold, silver and cryptocurrencies also posted steep losses. "The level of paranoia is Category 5," said Joseph Shaposhnik, portfolio manager at Rainwater Equity. "It's not something that we've seen in quite a long period of time." The worries over AI-fueled disruption underscore a sea change in market sentiment. Enthusiasm for the technology drove the lion's share of stock market gains over the last few years. But it has been replaced by worries that the newest tools released by Alphabet Inc.'s Google, closely held AI developer Anthropic and a slew of lesser-known startups are already good enough to threaten a wide array of companies, many far outside the umbrella of technology. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. Wall Street has become so jittery about AI that just a whiff of possible disruption is enough to send entire sectors over a cliff. There wasn't as clear of a catalyst around the real estate selloff that started Wednesday and sent shares of CBRE Group Inc. and Cushman & Wakefield Ltd. to their worst one-day drops since 2020. CBRE Chief Executive Officer Bob Sulentic said on the company's Thursday earnings callBloomberg Terminal that if AI leads to decreases in companies' headcounts and demand for office space, it would be a "long-term trend to unfold." Algorhythm Holdings, which previously traded as The Singing Machine Company Inc., announced that its SemiCab platform was helping its customers scale freight volumesBloomberg Terminal by 300% to 400% without a corresponding increase in operational headcount. The company rebrandedBloomberg Terminal in 2024 as an AI logistics firm. Atkinson said the company pivoted to AI in part because US tariffs on karaoke machines imported from China caused the business to suffer. "As a CEO of a public company, I have a fiduciary responsibility to the shareholders to look for opportunities that have better growth opportunities," he said. "We decided to just go all in on freight logistics." Algorhythm reported less than $2 million in sales for the quarter that ended on Sept. 30, with a net loss totaling nearly $3 million for the period. But its shares soared 30% to $1.08 after its announcement, paring what had been a jump of as much as 82% earlier in the session. "I would probably be more inclined to be skeptical that this particular company is gonna be the one to disrupt the industry," Citigroup Inc.'s Ariel Rosa said of Algorhythm. "But the notion that someone will eventually come in and try to disrupt the industry seems like a decently high probability." CH Robinson in a statement to Bloomberg said it believes AI will only continue to strengthen its performance, while noting that "perceptions of artificial intelligence are influencing recent market activity." The logistics selloff extended to Europe, with Denmark's DSV A/S closing down 11%. Swiss firm Kuehne + Nagel International AG slid 13%. Investors had seen transportation as part of the "AI resistant" trade, particularly as volatility in technology names caused a push to diversify portfolios. However, the selloff has proved that even the "old economy" is not immune to the AI concerns that have been wreaking havoc on the market. "The worry is that it could disintermediate the truck brokers, which is why they're getting hit so much," said Christopher Kuhn, a Benchmark analyst covering trucking stocks. "The whole sector is getting hit, but it's mostly on the broker side." "I guess it was their time," Kuhn added. "I think it's overdone but we need more detail. But clearly it's unlikely that a big corporation is going to put in this software and not use a major truck broker like CH Robinson and RXO." Knee-Jerk Reaction Analysts and investors have warned that some of this steep selling reflects a knee-jerk reaction and could be overestimating the risk. Barclays analyst Brandon Oglenski defended CH Robinson, as well as other asset-light transport companies, seeing the reaction as "disproportionate to the risk." Oglenski added that he would be a buyer of the sector on weakness, particularly in CH Robinson shares. "While the impact from AI over time is inevitable and powerful, stock reactions to news like this tend to be emotional and exaggerated," said Mark Hackett, chief market strategist at Nationwide. Meanwhile, investors were desperately trying to game out what sector could be next to get hit by the "AI scare trade." "The $100,000 question is everyone trying to figure out who or what segment is going to be targeted by the market next," said David Sekera, chief US market strategist for Morningstar. "What we've seen is some people have that 'sell first, ask questions later' type of mentality."

Investors are starting to sour on their love affair with AI

Why it matters: There's growing unease around the AI boom, and it's showing up in the stock market, investor surveys and among regular Americans. Driving the news: A record share of investors -- 35% -- say companies are spending too much on AI, per a new Bank of America global fund manager survey out Tuesday. * Meanwhile, 54% of Americans surveyed over the past week think that companies are investing too much in AI, per YouGov/The Economist. A majority also don't trust AI and believe it will eliminate jobs. The big picture: AI spending had been the backbone of the tech-led bull market. * Typically, when a U.S. tech firm announced an increase in AI-related spending, its stock price went up, says Elyas Galou, a senior global investment strategist at Bank of America. * Now, these announcements are leading stock prices down. "From headwind to tailwind," he says. How it works: In its earnings report in early February, Amazon said it plans to spend $200 billion on capital expenditures this year, up 60% from 2025. * Since then, its stock price has fallen nearly 16%. * Meanwhile, Microsoft's stock is down nearly 9% since its earnings report in late January, outlining $37.5 billion in capital expenditures in its most recent quarter, an increase of 65% from the previous year. * At the same time, AI fear has swept through a handful of industries, most dramatically in software. Between the lines: All the spending on AI infrastructure means less money for stock buybacks, Galou notes. * And buybacks have effectively driven the stock market higher since the financial crisis, he says. Where it stands: Meta, Amazon, Microsoft and other hyperscalers are still spending record amounts on AI. * This week, Morgan Stanley raised its forecast of hyperscaler capex in 2026 to $740 billion, up from $570 billion just a couple months ago. * Why? "Demand for compute continues to exceed supply by a wide margin," equity analysts at the bank wrote in a weekend note. * In other words, these tech companies need more processing power and energy to train and run AI models. What to watch: "We think the next leg will certainly be one of the big AI hyperscalers announcing a capex cut."

Shares in trucking and logistics firms plunge after AI freight tool launch

SemiCab platform by Algorhythm, previously considered a 'penny stock', sparks 'category 5 paranoia' across sector Shares in trucking and logistics companies have plunged as the sector became the latest to be targeted by investors fearful that new artificial intelligence tools could slash demand. A new tool launched by Algorhythm, a former maker of in-car karaoke systems turned AI company with a market capitalisation of just $6m (£4.4m), sparked a sell-off on Thursday that made the logistics industry the latest victim of AI jitters that have already rocked listed companies operating in the software and real estate sectors. The launch of Algorhythm's SemiCab platform, which it claimed was helping customers scale freight volumes by 300% to 400% without having to increase headcount, sparked an almost 30% surge in the company's share price on Thursday. However, the impact of the announcement sent the Russell 3000 Trucking Index - which tracks shares in the US trucking sector - down 6.6% on Thursday, with CH Robinson Worldwide plunging 15% by the close of trading, having been down as much as 24%. The fall across the sector - Landstar System dropped 16%, RXO 20.5% and J.B Hunt Transportation Services and XPO both about 5% - was the worst since Donald Trump's tariff trade war in April last year. "The level of paranoia is Category 5," said Joseph Shaposhnik, a portfolio manager at Rainwater Equity. "It's not something that we've seen in quite a long period of time." Algorhythm Holding's chief executive expressed incredulity that his company could spark an artificial intelligence "scare trade" reaction of such scale. "Never in my wildest dreams would I ever have imagined a day like today," said Gary Atkinson, whose company was considered a "penny stock" in terms of stock market scale. "It's almost like David versus Goliath." Listed drug distribution stocks were also caught up in the sell-off, with McKesson Corp and Cardinal Health falling about 4%. In Europe, the logistics business DHL Group fell 4.9%, DSV A/S fell 11% and Kuehne + Nagel International AG plunged 13% in late trading on Thursday. "[There is an] emerging debate around open-source automation agents such as Molt Bot that offer increased potential to automate routine back-office tasks and help equalize the technology playing field for smaller operators," said Daniel Moore, an analyst at Baird. Algorhythm was previously focused on developing in-car karaoke systems, but sold its Singing Machine business to Stingray for $4.5m in 2025 before pivoting to its AI freight platform.

Blinking New Warning Sign Appears for AI Industry

Investors have been rattled by the enormous amount of money AI companies are committing to spend on infrastructure buildouts. Amazon alone saw its share price drop precipitously earlier this month after announcing that it's planning to spend $200 billion this year on AI. Microsoft's shares also plummeted after stoking fears that a return on AI investment may be even further off than expected. In total, big tech companies are predicted to spend a record-breaking $650 billion on AI in 2026 alone, astronomical commitments that have Wall Street seriously on edge. Fears over an AI bubble continue to grow as analysts warn that companies are massively overinvesting. According to a new Bank of America survey of 162 fund managers, a significant 35 percent said corporations are overinvesting in capital expenditures -- funds used by a company to acquire, upgrade, and maintain physical assets -- at a record proportion compared to previous survey results spanning the last 20 years. Only 20 percent said they approved of increasing capital expenditures. An AI bubble is a clear focus. A full 25 percent of survey respondents said they see the AI bubble as the largest risk -- even more so than inflation and geopolitical conflict. And 30 percent said that AI expenditures were the most likely source of a credit crisis. In short, the survey results paint a dire picture of the current state of the market, blinking warning signs that big tech companies are spreading themselves too thin by continuing to hemorrhage tens of billions of dollars each quarter. Meanwhile, tech leaders continue to justify their enormous spending, with Google CEO Sundar Pichai touting the present moment as "extraordinary" and "transformational," during the AI Summit in New Delhi, India, on Wednesday, comparing the AI boom to the industrial revolution, "but ten times faster and ten times larger." AI chipmaker Nvidia CEO Jensen Huang also attempted to calm spooked investors this week, arguing AI investments are just the beginning. But analysts are far less convinced. "I would say clients are justified in being worried [about an AI bubble] because there's a lot of uncertainty," Orbis Investments advisor Ben Preston told the Financial Times.

Tech stocks fall as AI disruption fears hit more companies

Wall Street is back to playing defense against AI. After the long weekend, stocks reopened under pressure. The Nasdaq $NDAQ Composite slid close to 1% in early trading, with the S&P 500 (down 0.8%) and the Dow Jones Industrial Average (down 0.4%) also in the red. The selling wasn't confined to obscure corners of the market. Mid-morning trading showed broad weakness across the AI complex -- from chipmakers to platforms -- as investors tried to sort out who actually benefits from the boom and who might be replaced by it. The market reaction has been messy rather than surgical, and in the AI neighborhood watch, nobody was spared: Around 10 a.m. ET, shares of Nvidia $NVDA were down around 1.6%, Microsoft $MSFT and Palantir $PLTR Technologies were also lower, 1.3% and 1.2%, respectively, and Advanced Micro Devices had fallen almost 5%. Amazon $AMZN -- a major cloud and AI player -- was also trading down. Investors are acting like AI is now close enough to the revenue line to matter. The market is scanning for businesses that sell expensive human processes. If AI agents can do more of the end-to-end work -- planning, searching, comparing, synthesizing, executing -- then the companies that make money as toll collectors start looking less inevitable. Recent reporting has tied waves of selling to product launches that make automation feel less theoretical and more operational. Wealth-management platform Altruist rolled out AI-enabled tax planning. Insurance marketplace Insurify launched a ChatGPT-style comparison tool. Each announcement was followed by pressure in brokerages and insurance intermediaries, as investors asked: If software can handle more of the workflow, what happens to the fee? The fear has spread well beyond fintech. The "AI scare trade" moving from software into places that don't usually share a group chat: private credit exposure tied to software, financial intermediaries and data firms, real estate services, insurance brokers, even trucking and logistics after an AI freight tool claim spooked the sector. When a narrative starts jumping industries like that, it stops being a single-stock debate and becomes a market behavior. That makes AI a potential margin compressor. The S&P software and services group has shed roughly $2 trillion since its October peak, with a large share of that damage concentrated in recent weeks. Analysts at BNP Paribas estimate that about a fifth of private credit exposure is tied to software, which helps explain why alternative asset managers have also been swept into the turbulence. Strategists are split on what comes next. Jefferies economist Mohit Kumar has framed the move as rotation -- capital moving between winners and losers rather than fleeing equities outright. At JPMorgan $JPM Chase, strategist Dubravko Lakos-Bujas has argued that markets may be flirting with worst-case disruption assumptions, creating potential rebound opportunities in higher-quality software. Meanwhile, Daniel Skelly of Morgan Stanley $MS recently described a "bull market in disruption hysteria." The market can believe two things at once: That AI will drive massive spending on chips, cloud, and data centers, and that AI will take a razor blade to certain profit pools. On ugly mornings, it will sell both the supposed "victims" and the obvious "enablers," because uncertainty is contagious and positioning is a blunt instrument. The question on Wall Street today is less "Who benefits from AI spending?" and more "Who gets their margin compressed first?" And for now, Wall Street is answering that question with maybe the only tool it trusts: the sell button.

Trillion-dollar AI market wipeout happened because investors banked that 'almost every tech company would come out a winner' | Fortune

Investors wobbled last week as they worked through the disruption AI is likely to cause across global industries, with further hiccups potentially bubbling through this week. But the reckoning should have been expected, argued Deutsche Bank in a note to clients this morning, because it is a readjustment of perhaps overly optimistic expectations. Software stocks in particular suffered a wipeout amid mounting concerns that large language models may replace current service offerings. Companies in the legal, IT, consulting and logistics sectors were also impacted. JP Morgan wrote last week that some $2 trillion had been wiped off software market caps alone as a result, a reality that prior to a fortnight ago, Deutsche's Jim Reid argued had been purely academic. A 13-figure sell-off is something Reid has speculated over for some time, telling clients: "For months, my published view has been that nobody truly knows who the long term winners and losers of this extraordinary technology will be. Yet as recently as October, markets were implicitly pricing in a world where almost every tech company would come out a winner. "Over recent weeks we've seen a more realistic differentiation emerge within tech -- but that repricing is now rippling into the broader economy with surprising speed." Reid hasn't been alone in his suspicion that investors had perhaps been painting over the entire stock market (and indeed wider economy) with the same, optimistic brush. Some speculators have made broad-stroke arguments that the efficiencies offered by AI will result in wins for the vast majority of companies, while others have argued that while AI is not in a bubble, there are pockets of overoptimism that may burst. JPMorgan's CEO Jamie Dimon is of such an opinion, explaining at the Fortune Most Powerful Women Summit last year: "You should be using it," (speaking to any business that was listening). But he added a caveat, saying that back in 1996, "the internet was real," and "you could look at the whole thing like it was a bubble." Then he broke down the real difference that he sees -- between AI, on the one hand, and generative AI, on the other. It's an important distinction, Dimon said, while adding that "some asset prices are high, in some form of bubble territory." Indeed, Jeremy Siegel, Emeritus Professor of Finance at The Wharton School of the University of Pennsylvania, argued that such shifts demonstrate investors are "asking the right questions." Writing for WisdomTree a week ago, where he serves as senior economist, Siegel said: "When companies talk about $200 billion in capital expenditures, markets should scrutinize payback periods, competitive dynamics, and whether durable moats can be built in an environment where technology is evolving at breakneck speed. That tension explains why leadership will continue to rotate even as the secular story remains intact." That said, Reid suggested that the market may be repricing overzealously, arguing the disruption in "old economy" sectors feels overdone: "The real challenge is that even by the end of this year, we still won't have enough evidence to identify the structural winners and losers with confidence. That leaves plenty of room for investors' imaginations -- both optimistic and pessimistic -- to run wild. As such big sentiment swings will continue to be the order of the day." Disruptions provoked by investors' caution around AI sits at odds to other market adjustments, argues Ed Yardeni, because it is a cycle which feeds itself. Yardeni, the president of the well-regarded economic research shop after his own name, wrote over the weekend that AI is "speed skating on ice." While it is typical for technological revolutions to be disruptive, the top economist argued, AI has the potential to unseat its own creators. He argued AI has the "ability to write software code, including AI code. So it can feed on itself, with the new code eating the old, making it obsolete very quickly. The pace of obsolescence seems to be moving at warp speed for both AI hardware and software, particularly the LLMs. That pace has recently spooked investors who've been selling the stocks of any company that might be negatively disrupted by AI."

A stock market doom loop is hitting everything that touches AI | Fortune

The stock market turmoil unleashed by the artificial-intelligence industry reflects two fears that are increasingly at odds. One is that AI is poised to disrupt entire segments of the economy so dramatically that investors are dumping the stocks of any company seen at the slightest risk of being displaced by the technology. The other is a deep skepticism that the hundreds of billions of dollars that tech giants like Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Alphabet Inc. are pouring into AI every year will deliver big payoffs anytime soon. The dueling anxieties have been brewing for months. But they've shifted to the center of the stock market over the past two weeks. The result has been a series of punishing selloffs that have hammered dozens of companies across a number of industries -- from real estate services and wealth management, to insurance brokers and logistics firms -- and wiped more than $1 trillion from the market values of the big tech companies investing the most in AI. "There is a contradiction when it comes to what investors are worried about when it comes to AI," Julia Wang, the north Asia chief investment officer at Nomura International Wealth Management, told Bloomberg Television. "Those two things can't be true at the same time." The shift marks a major break from the sentiment of the last few years, when speculation that AI would set off a transformative productivity boom kept pushing stock prices higher. While big tech stocks kept rising -- sending Meta surging nearly 450% from the end of 2022 until the start of this year, and Alphabet up more than 250% -- the hand-wringing over whether it was a bubble about to burst did little to derail the rally. That began to change late last month as earnings reports from some of the biggest tech companies started to spook investors, who are growing impatient that the spending has yet to produce a commensurate windfall in revenues. Microsoft, Amazon, Meta, and Alphabet alone are expected to spend more than $600 billion on capital expenditures in 2026. That's hoovering up free cash flows and loading the companies with depreciating assets, radically altering many of the characteristics that have helped fuel the firms' rise over the past decade. "This is a real no-win situation," said Anthony Saglimbene, chief market strategist at Amerprise Advisor Services. "Investors were comfortable saying, 'so long as it happens in the future, I'm comfortable with Microsoft or Amazon or Alphabet spending the money.' Now they want to know more immediately when the payback will come -- and we don't have a clear picture." Since Microsoft and Meta kicked off the fourth-quarter earnings season on Jan. 28, Microsoft and Amazon shares have each dropped more than 16%, with Amazon mired in its longest losing streakin about 20 years. Even Alphabet, which is widely regarded as the biggest AI winner in the group, is down 11% off a recent peak. Meta, whose strong revenue growth overshadowed higher-than-expected capital spending, has fallen 13% since an earnings-fueled rally. In total, nearly $1.5 trillion in combined market value has been wiped out from the group, pushing the tech-heavy Nasdaq 100 Index into negative territory for the year. At the same time, investors are growing increasingly worried about the businesses that will potentially be swept aside -- or at least significantly upended -- by the new applications that are being steadily rolled out. That has caused a series of stock market selloffs that have flared repeatedly and hit private-credit firms, video-game makers and software companies, among others. The latest bout began after Anthropic PBC released productivity tools for lawyers and financial researchers, hammering the stock price of companies across those industries. Insurance brokers tumbled on another program tied to OpenAI. One from a little-known startup, Altruist Corp., battered wealth-managers like Charles Schwab Corp. and Raymond James Financial Inc. Even a press release from a former karaoke company with less than $2 million in quarterly revenue sent the stocks of logistics companies tumbling. The market has seen previous AI-related routs that were later reversed, such as the one set off by the Chinese company DeepSeek early last year. And to many, the frantic selling looks like another overreaction -- especially since AI, rather than displacing entire companies may very well wind up making them more profitable instead. "Just because the exuberance of the past few years has been taken down, people are now acting irrationally, thinking AI has become a headwind to the economy," said Bobby Ocampo, the co-founder and managing partner of Blueprint Equity. However, he added, the underlying concerns are legitimate. "There are a lot of AI-first companies trading very aggressively, but it is still very much a landgrab. People are starting to realize they're not meant to be super efficient or profitable in the near term." The spending spree has, of course, already been a boon to the companies that are on the receiving end of it, like Nvidia Corp. and memory chipmaker Micron Technology Inc. The shares of both soared over the past three years as sales surged. But the pile of money the tech giants are throwing at AI is getting so big that there's increasing skepticism about whether it can continue. On Tuesday, UBS Group AG cut its recommendation on technology stocks from attractive to neutral, citing still lofty valuations and expectations that the recent pace of capital spending by big tech companies -- often referred to as hyperscalers -- is unsustainable. "This level of capex will consume almost 100% of hyperscalers' cash flow from operations compared with a 10-year average of 40%," Ulrike Hoffmann-Burchardi, chief investment officer Americas at UBS Wealth Management, wrote in a note to clients. "That spending is now increasingly being funded by external debt or equity financing." At the same time, some are dubious of the fears that have rocked the market over the past few weeks. After all, given the relatively slow commercial adoption of AI, the way it will reshape business more broadly remains a subject of debate. "It might take a lot for the market to snap out of the doom loop and realize fundamentals are strong, the companies building AI will benefit, and that more companies can benefit by growing revenue and so forth with AI," said Ameriprise's Saglimbene. "When the market finally feels these companies aren't going out of business, it will realize AI is a tool that can lead to greater profitability, and that the companies that deploy it will gain. But we're going to be in a period of volatility for the foreseeable future."

Friday the 13th brings global selloff in stocks and gold as AI fear grips markets | Fortune

S&P 500 futures are flat this morning prior to the opening of markets in New York after the index fell 1.57% yesterday as traders fled from stocks exposed to AI. The market is now in negative territory for the year. Tech stocks led the decline yesterday, with the Nasdaq Composite down 2%. The S&P 500's software sector is down 27% since October, according to the Financial Times, which gives you an idea of how worried investors are that AI will simply replace software makers. Gold -- which is supposed to be a safe haven -- took a sharp dip yesterday, an indicator that traders just want their cash out of assets generally. It's back under $5,000 per troy ounce. Asia had a tough day -- Japan's Nikkei 225 was down 1.21% and China's CSI 300 was down 1.25% at the close this morning. But markets in the U.K. and Europe were flat-to-up, suggesting sellers may be taking a breather today. It's not just tech stocks that are in the crosshairs. Losses were imposed on non-tech companies too, as investors became paranoid about how much damage AI might inflict upon sectors like trucking, real estate, and finance. Perhaps the wildest example of the rout was Algorhythm Holdings, a small trucking logistics company that also sells karaoke machines. The company said its SemiCab AI platform "helped customers scale freight volumes by 300% to 400% without a corresponding increase in headcount," according to Jim Reid and his team at Deutsche Bank. "The Russell 3000 trucking index fell -6.64% as companies of all size reacted to the news." "It's perhaps indicative of the state of markets at the moment that a $6 million market cap company that until recently specialized in karaoke helped wipe tens of billions off logistics stocks to add to the weakness. I've seen some shocking karaoke performances in my time but this perhaps tops them all," Reid told clients. In commercial real estate, CBRE lost 8.84% yesterday after its CEO said on an earnings call that AI might reduce demand for offices. "If there are less office workers in the long run as a result of AI, there will be less demand for office space. That would be a long-term trend to unfold," Bob Sulentic said. In theory, AI should allow companies to do more with fewer workers, thus boosting their earnings per share -- so it is puzzling that traders are dumping stocks that might be boosted by AI. Deutsche Bank's Reid noted that much of the selling driven by these anecdotes was purely speculative. "The market continues to price in further AI disruption across industries, sometimes in the most abstract way." For that reason, analysts on Wall Street this morning are suggesting that the selloff may be overdone. "We think that the AI Immunity Trade is getting overdone, especially in the Financials sector. Many of the trade's stock market casualties will survive and boost their productivity and profits using AI," Ed Yardeni of Yardeni Research argued. Thus far, there is little evidence that AI adoption is reducing employment outside the tech sector. Pantheon Macroeconomics' Samuel Tombs and Oliver Allen looked at employment in the industries most likely to be affected by AI and found little effect on jobs. "Payrolls across these sectors ... fell merely by 2,000 on average in the six months to December [and] the trend in employment in these sectors collectively improved in 2025 compared to 2024." "AI's biggest impact for now probably is the extra uncertainty it is creating for businesses, at a time when unpredictable federal government policies already cloud the outlook. But AI is not reliable or advanced enough yet to replace many existing jobs," they said.

US Stocks Today | Big tech faces valuation reset as AI spending scrutiny rises

The world's largest technology companies have seen notable declines in market capitalisation in 2026, reflecting a shift in investor sentiment after years of strong gains driven by artificial intelligence optimism. According to Reuters, markets are increasingly questioning whether heavy AI spending will generate returns strong enough to justify elevated valuations. Shares of Microsoft have fallen about 17% this year amid concerns over risks to its AI growth outlook and rising competition from Alphabet and other AI players, erasing a significant portion of its market value, according to Reuters data. Amazon has also declined sharply as expectations of a surge in capital expenditure, particularly for cloud and AI infrastructure, weighed on investor sentiment. Reuters reported that investors are increasingly focused on the near-term payoff from these investments. Meanwhile, Nvidia, Apple and Alphabet have also seen declines in valuation, highlighting a broader reassessment of growth expectations tied to the AI boom. In contrast, TSMC, Samsung Electronics and Walmart have added market value over the same period, supported by stronger earnings visibility and resilient demand. Strategists say the broader outlook remains constructive but caution that expectations are high. Looking ahead, the trajectory of mega-cap technology stocks will depend on whether companies can demonstrate tangible returns from AI investments through revenue growth and margin expansion. Markets are likely to remain sensitive to earnings surprises, with volatility possible if expectations are not met. Commenting on what's in store for US tech stocks ahead in 2026, Mayank Sharma, Director & Head - Asset Allocation and Products, Client Associates, said, "While debate on the US Technology sector being too expensive and the AI bubble continues, we believe the AI theme may persist as long as it is justified by continued strong earnings delivery. Any downward surprises to high expectations may lead to bouts of volatility," Further, Akash Hariani, Joint Managing Director, Motilal Oswal Private Wealth, said, "AI remains a key theme for 2026, though caution is advised. AI spending as a share of U.S. GDP is rising rapidly, with some estimates suggesting it contributed 35% of GDP growth in Q2 2025, and has the potential to exceed 50%. Massive capital investment in AI data centres, advanced semiconductors and cloud infrastructure has supported both economic activity and equity returns. Key risks include weaker-than-expected growth, a more hawkish Federal Reserve, and the eventual returns on invested capital in AI-related capex." At the same time, the evolving market environment suggests a greater focus on balancing growth with earnings visibility, as investors recalibrate portfolios in response to changing macro and valuation dynamics. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

US Market | Disruption vs Returns: The tug-of-war driving AI market volatility

Global markets are experiencing turbulence as investors weigh the immense potential of AI against the massive costs of its development. While AI's disruptive power across industries is undeniable, the timeline for significant returns on colossal investments remains uncertain. This duality is fueling market volatility, prompting a cautious approach as the AI revolution unfolds. The recent turbulence in global equity markets reflects a growing tension at the core of the artificial-intelligence boom. Investors are grappling with the possibility that AI could disrupt large parts of the economy while also questioning whether the enormous investments required to build AI capabilities will generate meaningful returns anytime soon. Market developments over recent weeks suggest that these competing concerns are increasingly influencing valuations and portfolio decisions, an analysis by Bloomberg revealed. From Optimism to Scrutiny For much of the past two years, enthusiasm around generative AI helped propel technology stocks higher. Companies investing aggressively in AI infrastructure, including Microsoft, Amazon, Meta Platforms, and Alphabet were widely viewed as leaders of a new productivity cycle. However, investor focus has shifted towards the scale of capital expenditures required to sustain AI expansion. Hyperscale technology companies are committing hundreds of billions of dollars annually to data centers, chips, and cloud infrastructure. This raises questions about cash-flow pressures and the timeline for returns, according to estimates cited by Bloomberg and commentary from UBS Group wealth management research. Disruption Concerns Ripple Across Industries At the same time, rapid advances in AI applications are prompting investors to reassess business models across sectors. New tools aimed at automating tasks in legal services, finance, customer support, and logistics have fueled concerns that traditional firms could face structural challenges. Developments from AI leaders such as OpenAI and Anthropic have intensified these concerns, as new product releases demonstrate the technology's potential to reshape workflows and competitive dynamics. Investment Boom Lifts AI Supply Chain While questions persist about returns for major tech investors, companies supplying critical components to the AI ecosystem continue to benefit from strong demand. Semiconductor leaders like Nvidia and memory manufacturers such as Micron Technology have seen robust growth amid rising orders tied to data-center expansion, as per company filings and analyst reports cited by Bloomberg and Reuters. Valuation Pressures and Market Volatility The coexistence of disruption fears and monetization uncertainty has contributed to heightened volatility. Strategists note in research commentary across global investment banks and asset managers that markets are struggling to price a technology whose long-term impact appears transformative but whose near-term earnings contribution remains uneven. UBS research has pointed out that elevated capital spending could absorb a large share of operating cash flows, potentially requiring increased reliance on debt or equity financing, a factor that has added to investor caution. A Transitional Phase for the AI Economy Economists and market analysts broadly agree that AI adoption is still in its early stages. Historical parallels with previous technological revolutions discussed in analysis from institutions such as the International Monetary Fund and major brokerage research suggest that productivity gains often materialize gradually, following periods of heavy investment and experimentation. If AI evolves into a general-purpose technology, its effects could extend beyond efficiency improvements to entirely new revenue opportunities, though the timing remains uncertain. Looking Ahead For investors, the current environment underscores the importance of balancing long-term conviction with near-term risk management. Tracking evidence of monetization, capital discipline among large technology firms, and real-world adoption trends will be critical in assessing whether AI investments translate into sustainable earnings growth. As global markets continue to digest new developments, artificial intelligence remains both a source of optimism and a driver of caution reshaping expectations and reinforcing the likelihood of continued volatility.

C.H. Robinson stock tumbles amid freight sector AI disruption fears By Investing.com

Investing.com -- C.H. Robinson Worldwide (NASDAQ:CHRW) stock plunged 20% Thursday, leading a broad selloff across freight transportation companies as investors fled from businesses potentially vulnerable to artificial intelligence disruption. The dramatic decline extended to several major industry players, with RXO, Inc. (NYSE:RXO) dropping 18%, Landstar System (NASDAQ:LSTR) falling 10%, Expeditors International of Washington (NASDAQ:EXPD) sinking 13%, XPO, Inc. (NYSE:XPO) declining 4%, and J.B. Hunt Transport (NASDAQ:JBHT) sliding 5%. While no specific news triggered the selloff, market participants appear to be rotating out of high-fee, labor-intensive business models that could be threatened by AI advancements in the freight logistics sector. The move mirrors similar investor reactions recently seen in software, private credit, real estate services, wealth management, and insurance brokerage sectors. Ironically, C.H. Robinson had previously received positive market attention for its early AI adoption efforts and resulting efficiency gains. Now the company faces the same disruption concerns affecting its peers. The selloff coincided with recent announcements from AI technology companies targeting freight inefficiencies. Algorhythm Holdings (NASDAQ:RIME) published a whitepaper this week claiming its SemiCab platform reduces empty freight miles by over 70% across active customer networks. According to Mordor Intelligence, the global truckload transportation industry represents approximately $3 trillion annually, with trucks driving empty nearly one-third of the time. This inefficiency translates to over $1 trillion in wasted freight spending each year, creating a massive opportunity for AI-driven solutions to disrupt traditional logistics models.

From software to real estate, U.S. sectors under the grip of AI scare trade

Feb 13 (Reuters) - Wall Street is in the grip of disruption worries from AI. It first started with investors dumping shares of software companies but soon spread to sectors seen as vulnerable to automation, driving sharp losses in U.S. stocks this week. The AI scare trade did not spare even sectors such as private credit, real estate brokers, data analytics, legal services and insurers. Global tech stocks took the hit after Anthropic unveiled a legal AI plug-in. But soon the investor unease deepened following a flurry of AI model upgrades and fresh releases. "With fear driving market sentiment, investors remain in 'sell first think later' mode, asking 'who is next' and showing no mercy for anything remotely seen as an AI loser," Barclays equity strategist Emmanual Cau said. Here's a look at how various sectors were impacted by the selloff: 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, on concerns that fast-advancing AI tools could upend traditional subscription and enterprise tools. So far this year, the worst-performing Nasdaq 100 stocks include Atlassian down 47%, Intuit down 40% and Workday, which has lost a third of its value. Salesforce tumbled about 30% in 2026, while Adobe is down 25% and CrowdStrike 12%. "There's this idea that AI is somehow going to replace built-out models in the near term - models that have been in place for many years and from which companies have profited strongly," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. The U.S. software sector's worst drawdown in more than three years also knocked down shares of alternative asset managers on concerns over their exposure to loans and leverage tied to the companies. Ares, Blackstone, Blue Owl, Apollo, TPG and KKR slumped between 13% and 24% this year. About a fifth of the private credit space is exposed to the software sector, according to estimates from BNP Paribas. FINANCIAL BROKERAGE, DATA ANALYTICS & LEGAL SERVICES The financial industry, particularly brokerages and data analytics firms, were hammered after wealth management firm Altruist introduced AI-enabled tax planning features, stoking fears of the fast-advancing technology upending 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 downbeat earnings forecast for 2026, has slumped more than 25% in February and was set for its worst month since 2009. Moody's, Factset Research and MSCI also fell sharply this month. Nasdaq-listed shares of Thomson Reuters touched a near five-year low last week on concerns about AI hurting its legal services business. REAL ESTATE SERVICES Commercial real estate and investment managers took a blow on Wednesday, which KBW analysts said was due to investors rotating out of high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption. CBRE Group and Jones Lang LaSalle sank about 12% each on Wednesday, and Cushman & Wakefield slumped nearly 14%. CoStar Group, owner of Apartments.com and Homes.com, fell 5.9%. "We view market concerns as overstated due to a combination of fragmented CRE end markets and the noncore nature of real estate activities for many clients," Morningstar analyst Sean Sunlop said, noting that their valuations were "not cheap" despite the selloff. INSURANCE Insurance stocks took a sharp hit. Brokers and underwriters across both sides of the Atlantic plunged after online platform Insurify released on Monday an AI-powered comparison tool on ChatGPT, which allows users to compare car insurance rates. The S&P 500 insurance index slumped 3.9% on Monday, its biggest single-day drop since mid-October. Shares of insurance broker Willis Towers Watson have shed 15% so far this week and were set for its worst week since the pandemic-selloff in March 2020. Aon fell 9% and Arthur J. Gallagher dropped 15% this week. "Ultimately, we believe brokers will bifurcate. Simpler insurance products like term life, personal auto, and home, could see significant AI disruption over the next five years," Morgan Stanley equity strategist Bob Jian Huang said. "Higher-valued brokers will use AI to enhance analysis and improve underwriting, not be displaced by it, in our view." TRUCKING & LOGISTICS Traders probably did not see trucking and logistics firms as an AI target, but the sector plunged sharply on Thursday. AI-focused logistics firm Algorhythm Holdings, which previously sold karaoke machines, said its SemiCab unit boosted customers' freight volumes by 300% to 400% "without a corresponding increase in operational headcount". The news triggered a rout in stocks such as Landstar System and C.H. Robinson. The Dow Jones Transportation Average fell 4.4%. Jefferies analysts, however, said the reaction was disconnected from fundamentals. "Proprietary freight data and physical networks remain durable moats," they said. (Reporting by Medha Singh and Sruthi Shankar in Bengaluru; additional reporting by Avinash P; Editing by Arun Koyyur)