Global markets saw a sharp selloff after a new AI automation release from Anthropic rattled investors, wiping out nearly $285 billion in market value across software, financial services, and asset management stocks. What began as a US-focused tech reaction quickly turned into a global risk-off move, with Indian IT stocks taking a heavy hit.

What sparked the global selloff

The trigger was a new AI automation tool released by Anthropic, aimed at automating legal and professional workflows such as contract reviews and legal briefings. Markets viewed this not as incremental innovation but as a direct threat to businesses built on billable hours, data subscriptions, and manual expertise.

As investors rushed to exit companies with even indirect exposure to professional services automation:

• A Goldman Sachs basket of US software stocks fell 6 percent, its worst one-day drop since April.

• Financial services stocks slid nearly 7 percent.

• The Nasdaq 100 dropped as much as 2.4 percent intraday.

Shares of legal data and workflow providers like Thomson Reuters and the London Stock Exchange Group came under pressure after analysts flagged intensifying AI-led competition.

Why this AI release hit harder

Unlike many AI startups that rely on third-party models, Anthropic develops its own core models. This gives it the ability to disrupt both traditional incumbents and smaller AI vendors simultaneously.

That positioning amplified investor fears. If model developers move directly into industry-specific tools, the pricing power of existing software and data platforms comes into question.

The selling soon spread beyond software.

Contagion spreads to credit and asset managers

Business development companies and alternative asset managers sold off sharply as investors priced in rising disruption risk to software-linked lending and private credit exposure.

Firms such as KKR, Apollo Global Management, and Blackstone saw steep intraday declines, reflecting fears that AI-led disruption could ripple into credit quality and deal activity.

Indian markets react: IT stocks bear the brunt

The global AI-led selloff did not stop at Wall Street.

Indian markets reacted sharply, with the Nifty IT index falling over 6% in a single session, marking its steepest decline in months. Selling pressure was concentrated in large IT services companies as investors reassessed long-term revenue visibility.

Indian IT firms have deep exposure to global enterprises in banking, legal services, compliance, and professional services. These are precisely the areas now seeing aggressive AI-led automation.

The concern for Indian investors is not an immediate demand collapse. It is structural margin risk. As global clients adopt AI to cut costs, they may push for lower billing rates, fewer outsourced roles, and outcome-based pricing models.

Why this matters for investors

This was not a selloff driven by earnings misses, currency moves, or interest rates. It was narrative-driven.

Markets are increasingly separating companies into three buckets: those that sell AI, those that use AI to improve efficiency, and those whose revenues risk being replaced by AI. Right now, many software firms and Indian IT services companies are being viewed as sitting in the path of disruption.

Until there is clearer evidence that these companies can protect margins and monetise AI adoption rather than absorb its impact, volatility in tech and IT stocks is likely to persist.

As one fund manager put it, this year will decide AI winners versus victims. Until business models adjust, stocks sitting in the path of automation will remain volatile.