NEW YORK – Logistics stocks plunged on February 12 as the group became the latest victim of “AI fear trading.” The person at the center of the sale is a former karaoke company with a stock market value of just US$6 million (S$7.6 million).
The value of this little-known company is just a fraction of the value it has knocked off from other companies that have been dumped entirely by investors who fear even the slightest threat posed by artificial intelligence (AI). The Russell 3000 Trucking Index fell 6.6% as the company promoted its logistics platform. CH Robinson Worldwide fell 15%, and at one point was down 24%, a record high, while Landstar System fell 16%.
It was the sector’s worst decline since the trade war-induced market crash in April.
The CEO of the karaoke-turned-AI company was among those shocked by the market movement.
“I never thought this day would come,” said Gary Atkinson, CEO of Algorithm Holdings. “It’s like David versus Goliath.”
Real estate companies, software makers, private credit providers, insurance intermediaries and asset managers are among the industries hit in recent deals by concerns about AI’s disruptive power.
February 12’s losses came amid a broader risk-off movement in the market, with the Nasdaq 100 index down 2% and gold, silver and cryptocurrencies also posting significant losses.
“The level of paranoia is Category 5,” said Joseph Shaposhnik, portfolio manager at Rainwater Equity. “This is not something we’ve seen in a long time.”
Concerns about AI disruption highlight a major shift in market sentiment. This enthusiasm for technology has driven much of the stock market’s rise over the past few years. But that has given way to concerns that the latest tools released by Alphabet Inc.’s Google, AI developer Anthropic and a host of lesser-known startups are already powerful enough to threaten a wide range of companies outside the technology realm.
Wall Street is so nervous about AI that the slightest hint of potential disruption sends the entire sector off a cliff. There was no clear trigger for the real estate sales that began on February 11, with shares of CBRE Group and Cushman & Wakefield suffering their worst one-day declines since 2020. CBRE CEO Bob Salentic said on a Feb. 12 earnings call that if AI leads to a decline in corporate employee numbers and demand for office space, it would be a “long-term trend developing.”
Algorhythm Holdings, formerly trading as The Singing Machine Company, announced that its SemiCab platform enables customers to increase cargo volumes by 300 to 400 percent without correspondingly increasing headcount in their operations. The company rebranded as an AI logistics company in 2024. Atkinson said the company’s pivot to AI was partly due to U.S. tariffs on karaoke equipment imported from China that hurt its business.
Algorithm reported sales of less than US$2 million for the quarter ended September 30, with net losses totaling nearly US$3 million for the same period. However, the company’s stock price soared 30% after the announcement, falling short of the peak of 82% it had seen in early trading.
Citigroup analyst Ariel Rosa said of Algorithm, “I tend to be skeptical that maybe this particular company is going to be an industry disruptor. But the idea that at some point someone is going to come in and disrupt the industry seems like a pretty high probability.”
The decline in logistics stocks spread to Europe, with Denmark’s DSV falling 11% and Switzerland’s Kuehne + Nagel International falling 13%.
Investors viewed transportation as part of an “AI-proof” trade, especially as the technology name changes prompted portfolio diversification. But the decline proved that even the “old economy” is not immune to the concerns about AI that are wreaking havoc on markets.
“The concern is that there could be disintermediation of truck brokers. That’s why truck brokers are being hurt so much. The whole industry is hurting, but it’s primarily on the broker side,” said Christopher Kuhn, a Benchmark analyst who covers trucking stocks.
Analysts and investors have warned that some of the surge may reflect an opportunistic reaction and overestimate the risks.
“While the long-term implications of AI are inevitable and powerful, stock price reactions to such news tend to be emotional and exaggerated,” said Mark Hackett, chief market strategist at Nationwide.
Meanwhile, investors were desperately trying to figure out which sectors could be hit next by AI fear trading.
“The $100,000 question is everyone is trying to figure out who or what segment of the market is going to be targeted next,” said David Sekera, chief U.S. market strategist at Morningstar. “What we’ve seen is that some people have a ‘sell first, ask questions later’ type of mindset.”
