By Auginia Bacon, CNN
(CNN) — We’ve been talking about AI changing the world for a long time. But this week was different, and it felt like we were in the middle of something big.
The stock market fell for three days due to both investor weakness and bearishness. Bullish concerns about AI include a somewhat lukewarm outlook for Nvidia and a viral blog post that imagined a hypothetical scenario in which white-collar jobs evaporate.
Anthropic has announced a new tool that could completely change the way people work. Anthropic then entered an epic battle over red lines with the Department of Defense, risking making AI companies pariahs. At the same time, the company relaxed its safety policies as the AI market continues to evolve.
And Block laid off 4,000 people, almost half of its staff, because of AI. The company’s CEO predicted other companies would do the same.
It was a truly wonderful week. The expansion is as follows.
Investor concerns
The Dow Jones Industrial Average fell more than 800 points on Monday, largely because of a Substack post by Citrini Research that laid out hypothetical scenarios about how advances in AI could disrupt certain parts of the economy, such as AI agents making white-collar jobs unnecessary.
The post, published last Sunday, specifically stated that it was not intended to be a prediction. It was a work of fiction.
Nevertheless, stocks of companies mentioned in the report, including DoorDash and American Express, plunged on Monday.
Tech stocks fell again on Thursday after leading chipmaker Nvidia reported earnings results. Although the company’s profits nearly doubled in the fourth quarter and sales hit record highs, Wall Street seemed disappointed by the somewhat lackluster outlook. This fueled AI bubble concerns that large investments in AI infrastructure may not lead to significant returns.
This week’s selloff showed how nervous investors are about AI, even if there is good news or even if the doomsday scenario is down to zero.
Claude AI changes
Anthropic announced an update to its Claude Cowork agent earlier this month, stoking concerns that it would replace dozens of software tools and fueling fears of disruption.
On Tuesday, Anthropic announced another update to Claude to improve the tool’s performance in specific job roles, such as design, human resources, and asset management roles, and can now work within applications such as Microsoft Excel and the PowerPoint app.
Anthropic denied that its tools will replace existing software tools or jobs, noting that Claude Cowork is designed to be complementary. But its rapid-fire updates are causing whiplash on Wall Street.
Man vs. Pentagon
Anthropic CEO Dario Amodei went head-to-head with the Department of Defense in a high-stakes battle over AI safety.
Anthropic has set two red lines for AI. Claude will not be used for autonomous weapons, and the other will not be used for mass surveillance of U.S. citizens.
Secretary of Defense Pete Hegseth said that regardless of Anthropic’s decision, the Department of Defense will use the Defense Production Act to access Anthropic’s technology. He spoke with Amodei on Tuesday and said the Pentagon wants to use the AI model “for any lawful purpose” and set a deadline for the company to agree on Friday.
Hegseth also threatened to terminate a $200 million contract with Anthropic, labeling the company a “supply chain risk” and potentially banning all companies with military contracts from doing business with Anthropic.
President Trump amplified that threat on Friday, posting on Truth Social that federal agencies must “immediately” stop using Anthropic’s technology. The president said there will be a “six-month phase-out period” for agencies using Anthropic’s products.
“Humanity should get their act together and work together during this phase-out period, or I will use the full power of my presidency to compel them to comply and there will be serious civil and criminal consequences,” President Trump said.
However, Antropic rejected the Pentagon’s proposal.
“Threats do not change our position. We cannot in good conscience comply with their demands,” Amodei said in a blog post.
Meanwhile, Anthropic on Wednesday relaxed its core safety policies to better adapt to a fast-moving market where competitors may not adhere to the same safety standards.
block layoffs
Economists and investors have long worried that the introduction of AI could lead to mass layoffs.
On Thursday, those fears appeared to come true when Block, the company behind Square, Cash App, and Afterpay, announced it was cutting its workforce by 40%. In a letter to shareholders, co-founder Jack Dorsey explicitly cited “intelligence tools” as the reason.
The company plans to lay off more than 4,000 people and reduce its workforce to less than 6,000. And Dorsey said in a memo that he believes “most companies are behind the curve” and that “the vast majority of companies will come to the same conclusion.”
This has raised new concerns about the employment apocalypse. Many economists still doubt it will happen all at once. But Mr. Dorsey’s prediction of mass layoffs driven by artificial intelligence certainly appears closer to reality this week than at any other time in history.
CNN Wire
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CNN’s John Toufigi, David Goldman, Hadas Gold, Ramishah Maruf and Alison Morrow contributed to this report.
