A sell-off rippled through software, real estate, and trucking stocks this past week as investors expressed concerns that artificial intelligence could disrupt certain industries — and analysts suggest that the turbulent declines may not have reached their conclusion. Software stocks experienced the initial impact of concerns surrounding AI disruption. However, those concerns quickly extended to insurance companies, brokerage firms, real estate services, and even logistics and trucking sectors. “Market is in shoot first, ask questions later mode, with any names/sectors that could be impacted by AI disruption taking a hit,” stated Mohit Kumar. The decline in equity values highlights a significant shift for investors moving ahead: artificial intelligence, which has been driving substantial gains in technology and various other sectors for an extended period, may now exert a negative influence on certain segments of the market. On February 9, shares of prominent insurance brokers experienced a decline following the introduction of a new insurance application by Madrid-based startup Tuio, which was developed using ChatGPT, as reported. This raised concerns that AI tools might undermine the business models and customer bases of established companies. Equities of professional services and insurance firms experienced a decline. Marsh shares experienced a decline of 7.5%. Arthur J. Gallagher shares experienced a decline of 9.85%. Brian Meredith remarked in a note that he believes the sell-off was “meaningfully overdone,” emphasizing that insurance brokers continue to serve as “essential intermediaries” for household financial decisions, and it is improbable that AI will ultimately disrupt the industry.
On Tuesday, tech startup Altruist unveiled a new tax planning feature for Hazel, the company’s AI tool. This heightened concerns that the tailored client services provided by brokerage and wealth management firms might encounter intensified competition. Charles Schwab shares dropped 7.42% Tuesday. Shares of financial services company LPL Financial and Raymond James experienced declines of 8.75% and 8.31%, respectively. Real estate services experienced a significant downturn on Wednesday and Thursday. Cushman & Wakefield shares tumbled 13.8% Wednesday and 11.5% Thursday. Shares of real estate service companies CBRE Group experienced a decline of 12.2% and 8.8% over the course of two days. Jones Lang LaSalle experienced declines of 12.5% and 7.6%. “We believe investors are scrutinizing high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption,” Jade Rahmani stated in a note. AI possesses the capability to not only rival conventional real estate brokerages and agents but also to significantly reduce the demand for office space overall, as executives in the AI sector forecast that their technology will eradicate substantial portions of the economy.
“If there are fewer office workers in the long run as a result of AI, there will be less demand for office space,” Bob Sulentic stated. “This is likely to represent a long-term trend that will develop over time.” The Dow Jones Transportation Average, comprising 20 firms within the transportation sector, experienced a decline of 4% on Thursday, marking its most significant drop since April. Algorhythm Holdings emerged as the focal point, unveiling a new tool designed to enhance efficiency and optimize operations within the trucking sector. The reaction was swift: Shares of RXO, a freight company, plummeted 20.45% on Thursday. Shares of logistics company C.H. Robinson Worldwide experienced a decline of 14.54%. “While perceptions of artificial intelligence are influencing recent market activity, C.H. Robinson has been a leader in AI for more than a decade and we believe AI will only continue to strengthen our performance and widen our competitive moat,” stated C.H. Robinson. Algorhym’s announcement was particularly unexpected given the company’s prior focus on selling karaoke machines before its strategic shift towards AI and logistics. “It’s perhaps indicative of the state of markets at the moment that a $6 million market cap company that until recently specialized in karaoke helped wipe tens of billions off logistics stocks to add to the weakness,” Jim Reid stated in a note.
Algorhythm shares experienced an increase of nearly 30% in the past week. Angelo Kourkafas indicated that “fear of AI disruption” has emerged as a prevailing theme in markets over the past two weeks. However, the fluctuations currently affecting the stock market are fundamentally rooted in speculative scenarios, he stated. Kourkafas indicated that the concerns are predominantly “speculative in nature” rather than grounded in immediate, fundamental alterations to companies’ revenue streams. “Yes, in the near term there could be fears of disruption across many different industries, but we know these companies are actively investigating ways to evolve and offer better platforms, products and services as a result of that,” Kourkafas stated. Jonathan Krinsky noted in a Thursday communication that single-stock movements driven by AI anxieties are “getting more and more extreme.” Krinsky noted “At a certain point … we begin getting concerned that the weakness supersedes the strength and the broad market becomes vulnerable.”