AI Revolution Begins to “Eat Its Own Children”: Global Markets Rocked by Mass Sell-Off of Software Stocks

An update to a chatbot from AI developer Anthropic, capable of automating legal work, has triggered a panic sell-off of shares in companies providing data and analytics. The wave of selling, which began in Europe, swept through Wall Street and reached the Asia-Pacific region. Shares of Relx, Salesforce, Adobe, Tata, and Kingdee plunged by 7-14%. Analysts state: investors no longer understand how to value such companies in the face of the AI threat.

Global stock markets this week encountered a new phase of the technological revolution—the destruction phase. As industry analysts report, the trigger for the crash was an update to the Claude chatbot from Anthropic (backed by Amazon and Google). The new tool is designed to automate legal work: reviewing contracts, analyzing non-disclosure agreements (NDAs), compliance procedures, and preparing template documents.

This news was perceived by the market as a direct challenge to the business models of companies that have been selling databases, analytical tools, and software to lawyers, banks, and corporations for decades. If AI can do it cheaper and faster, their future has been cast into doubt. For British and American investors, this volatility underscores the need to reassess portfolios focused on legacy software and data providers.

Chronicle of the Crash: From London to Tokyo

The first to feel the blow was London. Shares of the information and analytics company Relx plunged by 14%, the publishing group Pearson lost nearly 8%, and London Stock Exchange Group fell by 13%.

The wave immediately reached New York, where after the close of main trading, shares of key software companies showed deep declines:

• Salesforce, Datadog, Adobe — lost about 7%.
• Synopsys, Atlassian — fell by approximately 8%.
• Intuit — crashed by 11%.

By the morning of February 4th, panic had spread to Asia. Shares of Indian IT giant Tata Consultancy Services fell by 6.8%, Infosys lost over 8%. In China, shares of Kingdee International Software plummeted by 12.5%, and in Japan, Nomura Research Institute lost 8%.

Analyst Opinion: “Investors Don’t Know How to Value These Stocks”

Experts and analysts, as often happens, easily and with some irony explain the essence of events that have already occurred, as if they had long expected it but forgot to mention it. Well, better late than never.

“The relief that came with the easing selloff across the metals space lasted until news broke that Anthropic, an AI startup backed by Amazon and Google, had rolled out a new AI tool designed to handle legal and research work traditionally done using paid databases,”

— says Ipek Ozkardeskaya, Senior Analyst at Swissquote.

Her view is shared by Saxo Markets strategist Neil Wilson, who calls what is happening a “fire sale.”

“The sell software trade dominated the narrative on Tuesday in the US. IT research firm Gartner plunged -20% and hit a 52-week low after its full-year guidance missed expectations, and it was caught up in the broader selloff. Adobe slumped –7.31%, Salesforce –6.84%. This was carnage for these stocks. S&P Global, Intuit, Equifax and Moody’s were all down sharply too and it had the feel of a fire sale because investors just no longer have any visibility or confidence in their models,”

— stated Wilson.

He emphasizes the key problem:

“S&P 500 software stocks are now –25% YTD and is at its lowest level since April…this is all about the growing dispersion in the AI trade. We don’t know who’s going to win or lose, and we don’t yet know really how useful some of these tools are, but we reckon a lot of these firms are going to struggle to generate margin as AI will compress and compete away competitive advantage.”

In short, in plain language, they reaped what they sowed.

Domino Effect: The Blow Reaches the AI “Whales”

The panic was not limited to the software sector. As these companies are major clients of cloud service giants and chip manufacturers, the selling wave also affected them. During trading, shares also fell:

• Microsoft (MSFT) –2.87%
• Nvidia (NVDA) –2.84%
• Amazon (AMZN) –1.79%
• Meta (META) –2.08%

This demonstrates how interconnected the entire high-tech ecosystem is: a blow to the final link in the value chain (software services) echoes back to its beginning (hardware and cloud platform manufacturers).

Conclusions: The Market Seeks New Winners in the AI Era

The current sell-off is not just a correction but a fundamental reassessment of risks. The market is beginning to realize that artificial intelligence is not only a growth driver for companies like NVIDIA but also an existential threat to entire industries whose services can be automated.

For investors, this means the era of guaranteed growth for any “tech” stock is over. Deep analysis of a business model’s resilience to pressure from AI now comes to the fore. Who will be next? Financial analysts, consulting companies, design bureaus? The wave of “creative destruction” unleashed by AI is only gaining momentum, and in the coming months, it could radically reshape the map of the global stock market, separating those who adapt from those it will “devour.” Companies investing in AI training and implementation are seen as potential long-term survivors.