Recently, Wall Street’s fear of artificial intelligence has been intensifying. Companies facing potential disruption risks—from small and medium-sized software firms to large wealth management institutions—have seen their stock prices come under significant pressure. The market trading logic is shifting: once concerns about being replaced by AI arise, the immediate response is to sell.
This Tuesday, the startup Altruist Corp launched a tax strategy tool, triggering a single-day plunge of over 7% in the stock prices of companies such as Charles Schwab (SCHW), Raymond James Financial (RJF), and LPL Financial (LPLA), marking their largest drop since last April. This is just one snapshot of the current market panic. As hundreds of billions of dollars in AI investments gradually translate into real products, anxiety about potential industry disruption is heating up. John Belton, a manager at Gabelli Funds, points out that any company with potential disruption risks is facing indiscriminate selling.
In the past few years, breakthroughs in AI technology were a market focus, driving tech stocks to lead market gains. However, since early last week, the successive launch of a series of AI products has prompted a sudden shift in investor sentiment. Instead of focusing on picking winners in the AI field, capital is rapidly withdrawing from any sector that might face replacement threats. Will Rhind, CEO of Graniteshares Advisory, notes that last year’s logic was to believe in AI while still searching for practical applications, but now, as AI applications increasingly demonstrate their powerful potential, disruption has become a tangible threat.
The software industry has long been shrouded in AI anxiety. Last week, after AI company Anthropic released new tools, panic began to spread to sectors such as financial services, asset management, and law. On Monday, the online platform Insurify launched a ChatGPT-based car insurance comparison app, leading to a collective decline in U.S. insurance brokerage stocks. The next day, wealth management stocks became the new target of selling, driven by Altruist’s tool Hazel—a product that helps financial advisors customize personalized strategies.
Altruist CEO Jason Wenk admitted that the stock market’s severe reaction took him by surprise, with several institutions losing tens of billions of dollars in market value as a result. However, he believes this precisely highlights the competitive threat posed by their technology. Wenk pointed out that the technological architecture behind Hazel is capable of replacing many roles in the wealth management industry. Tasks that previously required teams to complete may, in the future, be efficiently handled by an AI service costing just $100 per month.
Currently, companies like OpenAI and Anthropic have already secured a place in software engineering with their programming assistance tools and are accelerating their penetration into other industries. However, how this technology will ultimately proliferate remains uncertain. Taking banks as an example, technologies such as cryptocurrencies and digital services have repeatedly posed challenges but have yet to shake their dominant position.
Regarding the rapid shift in market sentiment, some industry insiders hold reservations. Gabelli’s Belton believes that every industry will have winners and losers, but the actual implementation of technological disruption typically unfolds more slowly than expected. This market correction also reflects widespread anxiety: driven by the AI investment boom and economic resilience over the past few years, stock valuations have reached high levels, making investors exceptionally sensitive to any signs of reversal.
