How severe is the AI ​​panic selloff in the begin of 2026?

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Reasons for the Initial Panic

The AI panic selloff in the begin of 2026, Market panic spread rapidly after Anthropic launched its new service, “Claude Cowork,” on January 12th. The latest version of Claude Code, Claude Opus 4.5, demonstrated impressive practical capabilities.

Following Anthropic’s continued release of various AI plugins, non-software industries also began to be impacted. With a series of AI model upgrades and new product launches, investor anxiety intensified.

Software Stocks Lead the Decline

AI panic led to the worst monthly performance for software stocks since the financial crisis; AI Impact-CRM fell 48% from its peak, MSFT fell 28%, SHOP fell 40%, ADBE fell 61%, ORCL fell 59%, SAP fell 40%, INTU fell 50%, NET fell 37%, PANW fell 37%, ADSK fell 30%, NOW fell 56%, WDAY fell 45%, SNOW fell 45%, TEAM fell 72%, and MNDY fell 76%. The valuations of well-known software stocks such as ServiceNow, Adobe, and Workday are currently at ten-year lows.

Morgan Stanley-tracked software stocks are currently trading at only 18 times their projected earnings over the next 12 months, the lowest level on record, far below the past ten-year average of over 55 times. This sell-off has further widened the performance gap between software companies and other sectors of the technology sector. While the Nasdaq 100 index is nearing its all-time high, the share prices of software companies like ServiceNow have fallen to multi-year lows.

Bloomberg Intelligence data shows that the profit growth rate of software and services companies in the S&P 500 is expected to slow from about 19% in 2025 to 14% in 2026. Software stocks’ weighting in the S&P 500 has fallen from 12% to 8.4%, marking their biggest 12-month drop in over 30 years.

The S&P 500 Software & Services index has lost approximately $2 trillion in market capitalization since its October peak, with half of that loss occurring in the past two weeks, driven by market concerns that rapidly evolving AI tools could disrupt traditional subscription-based and enterprise software models.

The selloff has spread to other industries

Wall Street is deeply gripped by a disruptive panic over AI. This turmoil initially began with investors selling off software company stocks, but quickly spread to industries considered vulnerable to automation, pushing U.S. stocks sharply lower this week. This AI panic sell-off has even affected sectors such as private lending, real estate brokerage, data analytics, legal services, and insurance.

Insurance brokerage stocks plummeted on Monday, followed by wealth advisors on Tuesday, real estate services on Wednesday, and logistics stocks on Thursday, indicating that the market has begun to reassess the impact of AI on profit models across various industries.

The Nasdaq Composite fell 2.1% in the week ending February 9th, and the S&P 500 fell 1.4%, but logistics giant CH Robinson’s stock plummeted 12%, Charles Schwab fell 11%, real estate developer CBRE plunged 16%, and reinsurer Gallagher fell 13%.

Approximately one-fifth of private credit funds went into the software industry. Alternative asset management companies were also affected, as the market worried about potential breaches in their software-related loans and leverage. Ares, Blackstone, Blue Owl, Apollo, TPG, and KKR have all fallen between 13% and 24% this year.

Commercial real estate and investment management companies suffered heavy losses on Wednesday. KBW analysts said the reason was that investors withdrew from high-fee, labor-intensive business models that were considered vulnerable to AI disruption. CBRE and JLL each fell about 12% on Wednesday, Cushman & Wakefield plummeted nearly 14%, and CoStar Group, which owns platforms such as Apartments.com, fell 5.9%.

Insurance stocks suffered a sharp sell-off. Following the launch of an AI-powered insurance comparison tool on ChatGPT by online platform Insurify on Monday, shares of European and American insurance brokers and underwriters all plunged. The S&P 500 Insurance Index fell 3.9% on Monday, its biggest single-day drop since mid-October. Willis Towers Watson, an insurance brokerage firm, has fallen 15% in a week, potentially marking its worst weekly performance since the pandemic sell-off in March 2020. Aon fell 9%, and Arthur J. Gallagher fell 15% in a week.

Algorhythm Triggers a Storm

Algorhythm’s claim of increasing freight volume by 400% without adding manpower triggered a sharp drop in logistics stocks, with the Russell 3000 Trucking Index falling 6.6%.

Algorhythm surged 29.87%, while logistics stocks, which had suffered their worst decline since April of last year, saw RXO fall 20.45%, CHRW fall 15%, LSTR fall 16%, and pharmaceutical distributors MCK fall 3.9% and CAH fall 4%.

Altruist Devastates Wealth Management Industry

Financial brokerage, data analytics, and legal services were also affected. Following Altruist’s launch of its AI-powered tax planning feature, the financial industry, particularly brokerage and data analytics firms, was severely impacted, with market concerns that this rapidly developing technology would disrupt their business models. Brokerages LPL Financial, Raymond James, and Charles Schwab saw their shares fall by more than 7% in a single day.

Following Anthropic’s announcement that Claude Opus 4.6 could act as an AI colleague, FDS plummeted 7%, SPGI dropped 3%, and TRI plunged 5%.

Index provider S&P Global released a pessimistic 2026 earnings forecast, and its stock price has plummeted over 25% since February, potentially marking its worst monthly performance since 2009. Moody’s, FactSet, and MSCI also saw significant declines this month. Thomson Reuters hit a near five-year low due to market concerns about the impact of AI on its legal services business.

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