AI panic quickly spread across the stock market last week.
With each new update to the AI toolbox, investors are forced to pick winners and cut out losers in real time. It started last week with software, where the sector underwent the most dramatic price changes in nearly 30 years, wiping out $2 trillion in market capitalization.
But since then, fear has spread.
In a seemingly unconventional move Thursday, trucking stocks plunged after a company that made karaoke equipment published a paper boasting that its AI technology could improve transportation logistics.
The market has been aware of the risks of AI, but fears about how this technology will disrupt the business world seem to be reaching a fever pitch amid a constant barrage of updates and new tools.
The main indexes on Friday were reeling from a weaker-than-expected inflation report, but were on track for another down week. The tech-heavy Nasdaq Composite Index ended the week down 1%.
This is where the AI panic is being felt in the stock market.
software stocks
The historic decline in software marked the beginning of a week-long AI frenzy in the market. The sector wiped out $2 trillion in market capitalization in a matter of days last week, the largest drawdown in the sector outside of a recession in 30 years.
After Antropic announced a new plugin for its agent Claude Cowork, investors began to worry that AI could pose an existential threat to the software giant. The decline that started with legal software stocks spread to broader sectors.
The iShares Expanded High-Tech Software Sector ETF is down 1% for the week and 20% year-to-date.
Here are the stocks that caught our eye in the sector this week.
insurance brokers and wealth managers
The next targets of attack were securities companies and asset management companies.
Insurance company stocks took a hit on Monday. Wealth managers including LPL Financial, Charles Schwab and Raymond James then faced heavy selling pressure the next day after tech company Altruist unveiled a new AI tool it said could help clients plan their taxes “within minutes.”
Investors are concerned that AI capabilities could cut into profits for companies that provide similar outsourced services, such as wealth and estate planning.
The iShares U.S. Broker-Dealer & Stock Exchange ETF is down 6% this week.
Here are the stocks that caught our eye in the sector this week.
real estate
Spencer Pratt/Getty Images
Real estate companies began selling on Thursday as investors pondered how AI could disrupt the customer service provided by major companies.
Here are the stocks that caught our eye in the sector this week.
truck transportation
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Finally, there is truck transportation. The field came under fire Thursday, but not by Anthropic or another AI giant, but by a former karaoke equipment maker.
Algorhythm Holdings, formerly doing business as Singing Machine, has released a white paper touting a new AI freight scaling tool that it says has the potential to improve logistics efficiency.
The iShares U.S. Transportation ETF fell 3% for the week. Meanwhile, Algo’s stock price soared more than 30%, breaking out of penny stock territory and trading around $1.25 on Friday morning.
Here are the stocks that caught our eye in the sector this week.
