New York —

Anthropic just launched a new AI tool that could replace dozens of software tools. And Wall Street is panicked.

Claude Cowork is meant to be like an AI colleague, with the ability to read files, organize folders and draft documents on your behalf. New plugins tailored for specific industries like sales, finance, data marketing and legal launched on Friday. That sent software stocks into a spiral, raising fears that the bread-and-butter software-as-a-service business model that’s driven the tech and digital services industries is now at risk of disruption.

Wall Street is nervous that AI tools like Claude’s new plugins will challenge existing software companies’ data analytics and research products. Companies that use AI to automate and build their own tools might need fewer subscriptions to external research and data services, directly hurting software companies’ bottom lines.

The jury is still out on whether AI tools can ultimately decimate the software industry. But investors were spooked Tuesday, selling off shares in legal and financial software and services companies.

“Why do I need to pay for software, the thinking goes, if internal development of these systems now takes developers less time with AI?” Thomas Shipp, head of equity research at LPL Financial, wrote in a note last week. “Furthermore, with the release of offerings like Anthropic’s Claude Cowork, an application with access to read and edit files, (fewer) technical users are now empowered to replace existing workflows.”

An exchange-traded fund tracking the software industry slumped 5.69% on Tuesday and had its worst day since April. It was down 1% on Wednesday.

Thomson Reuters (TRI) plunged 15.83% Tuesday, its biggest single-day drop on record; and Legalzoom.com (LZ) sank 19.68%. Those stocks rebounded slightly Wednesday, each rising more than 1% as investors stepped in to buy the dip. European companies felt the pain too: London-based RELX, which owns data analytics company LexisNexis, fell 14% Tuesday and was down 1.5% Wednesday.

“While still early and preliminary with the product, this adds to investors’ fear that AI-native companies will be able to break into the legal tech space and compete with larger players like (Thomson Reuters) and RELX,” Toni Kaplan, equity analyst at Morgan Stanley, said in a note.

The sell-off spread Tuesday, as Wall Street reckoned with the potential for AI to eat into other companies’ business models. FactSet (FDS) fell 10.51%. Meanwhile, financial firms with funds invested in software companies sold off as well. Blue Owl (OWL) shares fell 9.76% on Tuesday.

The sliding stocks will likely only amplify concerns over AI-related job losses. Anthropic CEO Dario Amodei has warned AI will cause “unusually painful” disruption to jobs, arguing “AI could displace half of all entry-level white-collar jobs in the next 1–5 years.” However, other tech and business leaders have painted a less extreme picture of how AI could impact jobs.

Marc Benioff, CEO of Salesforce, told Fortune last year that the company won’t be hiring any additional software engineers, customer service agents, or lawyers because of AI tools.

But some believe the software sell-off triggered by Anthropic’s new tool is overblown. Last year when Chinese company DeepSeek released cheap and efficient AI models, chipmaker Nvidia lost nearly $600 billion in market value. A year later, DeepSeek is not causing the widespread disruption that was feared. Nvidia briefly became the world’s first $5 trillion company in October.

Nick Dempsey, director of media equity research at Barclays, wrote in a note that he doubts that general AI models will be a viable substitute for industry-specific expertise.

Analysts at Aurelion Research said they viewed the sell-off as “sentiment driven” based off “AI uncertainty.” That sentiment will likely “normalize” as companies see more measurable returns from AI, they said.

Anthropic’s new AI tool sends shudders through software stocks - CNN

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