A sharp selloff on Wall Street has rattled global markets after Wall Street tech stocks suffered one of their worst sessions in recent months. Nearly $1 trillion was wiped off technology valuations as investors reacted to growing concerns around artificial intelligence and weakening demand for microchips. The Nasdaq and broader Wall Street indices felt the pressure most intensely, with software and IT services taking a heavy hit.
The recent downturn highlights how fast-moving AI developments are reshaping investor sentiment. While artificial intelligence continues to promise efficiency and innovation, its rapid expansion has also sparked anxiety about disruption across established industries. These fears intensified after reports suggested that a new legal automation tool developed using Anthropic’s Claude large language model could significantly reduce the need for traditional enterprise software in sectors such as law and finance.
On Tuesday, the Nasdaq Composite fell nearly 2.5% at its lowest point before closing down about 1.5%, erasing roughly $800 billion in market value in a single day. This dramatic move forced investors to reassess whether the scale of the selloff reflected reality or was driven by panic around AI’s long-term impact.
The S&P 500 software and services index also suffered heavily, dropping nearly 4% on Tuesday and extending losses with another 0.73% decline on Wednesday. This marked its sixth straight losing session, bringing total losses since late January to around $830 billion. Several major companies were hit hard, with Thomson Reuters plunging close to 16% and the London Stock Exchange sliding nearly 13%. Overall, the index now trades about 26% below its October peak.
Analysts warn that such AI-driven tools could disrupt industries ranging from finance to law, even as their real-world effectiveness is still being tested. However, not everyone shares the pessimism. Some experts argue that fears around AI are overstated and that software remains essential. Echoing this view, Nvidia CEO Jensen Huang dismissed claims that AI will replace software as illogical, emphasizing that industries will adapt rather than disappear.
As uncertainty grips markets, investors watching Wall Street tech stocks are being urged to stay cautious, balanced, and adaptable in this rapidly evolving AI landscape.
