①Concerns about artificial intelligence on Wall Street have recently intensified, with investors selling off stocks of companies potentially impacted by AI. Shares of some insurance brokers and financial services giants plummeted; ②most analysts believe that although AI technology poses competitive threats, questions remain regarding its implementation, and overall market anxiety may also influence stock price volatility.
Recently on Wall Street, concerns surrounding artificial intelligence have continued to grow, with people continuously selling off shares of companies that could be affected by artificial intelligence (AI) technologies, ranging from small software vendors to large financial management institutions, none were spared.
On Monday (February 9), Insurify, an online insurance agency and comparison platform, officially launched its ChatGPT-powered insurance comparison application, causing share prices of multiple $Insurance Brokers (LIST2230.US)$ companies to plummet. The S&P 500 Insurance Index fell 3.89% in a single day, marking the largest single-day drop since October of last year.
On Tuesday (February 10), after Altruist—a little-known startup—introduced its AI-driven tax planning feature, major financial services firms $Charles Schwab (SCHW.US)$ closed down 7.42%, $Raymond James Financial (RJF.US)$ dropped 8.75%, $LPL Financial (LPLA.US)$ fell 8.31%.
Altruist’s AI tax planning application Hazel
Some of these stocks recorded their biggest declines since the April market crash caused by the US-China trade war (when Trump announced 'reciprocal tariffs'), reflecting what is now being called a 'sell first, ask questions later' trading mentality in the U.S. equity market.
Over the past few years, advancements in AI technology have been a focal point on Wall Street, with tech stocks leading market gains. As indexes repeatedly hit new highs, there has been ongoing debate about whether this represents a bubble on the verge of bursting or the beginning of a boom that could reshape productivity across American enterprises.
However, since the beginning of last week, a series of AI product launches has brought a noticeable shift in sentiment. Investors are no longer focused on picking winners but are instead rushing to avoid holding any companies that might be replaced.
John Belton, a fund manager at Gabelli Funds, stated: 'Any company at risk of having its business disrupted by AI is being indiscriminately sold off.'
Will Rhind, CEO of Graniteshares Advisors, said: 'I don’t know what will happen next either.'
Rhind added, 'Last year’s logic was that we all believed in AI – but were still looking for specific use cases. Now, as we continue to discover these applications becoming increasingly powerful and convincing, they are instead bringing disruption.'
Jason Wenk, CEO of Altruist (the financial services company that triggered a sharp decline in Tuesday’s trading), admitted he was surprised by the extent of the stock market reaction. However, he also believes this highlights the competitive threat posed by Altruist.
Wenk said, 'People are starting to realize that the architecture we use to build AI applications can replace any role within wealth management. Tasks that once required an entire team can now be accomplished efficiently with AI for just $100 per month.'
Nevertheless, questions remain regarding how the technology will be implemented. Take the banking industry as an example, which has previously faced multiple technological challenges such as cryptocurrencies and electronic services, yet none ultimately undermined its dominant position.
Belton of Gabelli Funds is among those skeptical of the shift in market sentiment. He pointed out that Wall Street's rapid pivot from worrying about an AI bubble to fearing its potential to disrupt the entire economy seems somewhat excessive.
He said, 'Every industry will have winners and losers, but one rule of thumb is that technological disruption often takes longer to materialize than expected.'
Moreover, this wave of pullback may also reflect overall market anxiety—stock valuations have been stretched in recent years by the AI investment boom and the resilience of the U.S. economy, making investors hypersensitive to any negative signals.
Rhind from Graniteshares stated, 'As long as the market catches even a whiff of negativity, stock prices could plummet by 10%. This kind of situation would never happen in a market with lower valuations.'
Ross Gerber, CEO of Gerber Kawasaki, believes that the recent panic surrounding 'AI victims' is premature, and it is too early to predict the consequences.
‘When we try to project what the world will look like five years from now, the truth is we simply don’t know. Yet the market is rushing to judgment while AI is still in its early stages.’
Editor/Doris
