Quick overview

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Anthropic PBC’s new AI automation tool caused stocks in the software, financial services, and asset management industries to plummet by $285 billion on Tuesday as investors rushed to sell shares with even the smallest exposure.

An index of financial services companies fell nearly 7%, while a Goldman Sachs basket of US software stocks fell 6%, its largest one-day drop since the tariff-fueled selloff in April. Before reducing losses to 1.6 percent, the Nasdaq 100 Index dropped as much as 2.4 percent.

 

The selloff began before the opening of the US market, with traders citing a statement on the Anthropic website as the cause of sharp drops in the shares of the London Stock Exchange Group Plc, the business and legal software manufacturer RELX PLC, and the credit and marketing services company Experian Plc.

Shares of Indian IT firms were the most recent to plummet, along with other Asian software stocks. Tata Consultancy Services Bellwether Ltd. declined by up to 6%, while Infosys Ltd. decreased by 7.1%. Xero Ltd. is a cloud-based accounting software provider. dropped as much as 16% during Sydney trading, the highest since 2013.

Asia’s larger tech sector has shown some resilience as hardware manufacturers, especially chipmakers, continue to dominate the market and have benefited greatly from the surge in AI investment.

Anthropic is one of many AI startups creating tools for the legal sector. Startups like Legora and Harvey AI were flooding the legal sector with tools they claimed would spare attorneys from tedious work long before Anthropic’s plugin. For over two years, investors have been pouring money into AI products for the legal sector.

Legora raised money at a $1.8 billion valuation in October, while Harvey AI was valued at $5 billion in June. In contrast, Anthropic creates its own models that can be tailored to the particular requirements of an industry. It has the distinct advantage of upending both established legal news and data services and legal AI startups, given its position as a major model developer in the AI ecosystem.