From Software to Real Estate, US Sectors Under the Grip of AI Scare Trade
Wall Street is facing a worrying disruption from AI. It started with investors dumping shares of software companies but quickly spread to sectors seen as vulnerable to automation, leading to heavy losses in US stocks this week.
The commercialization of AI has not spared even sectors such as private credit, real estate agents, data analytics, legal services and insurers.
Global technology stocks took a hit after Anthropic launched an official AI plug-in. But soon the investor became comfortable after the development of the AI model and the new release.
“With fear driving the market, investors remain in ‘sell first think later’ mode, asking ‘who’s next’ and showing no mercy for anything remotely seen as an AI loss,” said Barclays strategist Emmanual Cau.
Here’s a look at how different sectors contributed to the selloff:
Software and featured software loans
The S&P 500 Software & Services index has lost nearly $2 billion in value since hitting a peak in October. Part of the loss came in the past two weeks, with concerns that emerging AI tools could upend traditional registration and business tools.
So far this year, the worst performing Nasdaq 100 stocks include Atlassian down 47%, Intuit down 40% and Workday, which has lost a third of its value.
Salesforce is down nearly 30% in 2026, while Adobe is down 25% and CrowdStrike 12%.
“There is a perception that AI will somehow change the models that have been built in the near term — models that have been around for years and that companies have benefited from,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
The worst decline in the US software sector in more than three years also lowered the shares of some asset managers on concerns about their debt exposure and tied-up profits at the companies.
Ares, Blackstone, Blue Owl, Apollo, TPG and KKR are down between 13% and 24% this year.
About a fifth of the private credit space is represented in the software sector, according to estimates from BNP Paribas.
Financial transactions, data analysis and legal services
The financial industry, particularly brokerages and data analytics firms, took a hit after wealth management firm Altruist introduced AI-powered tax planning features, sparking fears of the emerging technology improving their business models.
Shares of brokers LPL Financial, Raymond James Financial and Charles Schwab fell more than 7% on Tuesday.
Index provider S&P Global, which issued a forecast of lower profits for 2026, fell more than 25% in February and had its worst month since 2009. Moody’s, Factset Research and MSCI also dropped significantly this month.
Nasdaq-listed shares of Thomson Reuters touched near five-year lows last week on concerns about AI harming its legal services business.
Housing services
Commercial and investment property managers took a hit on Wednesday, which KBW analysts said was due to investors shifting away from high-income, labor-intensive business models that are seen as potentially vulnerable to AI-driven disruption.
CBRE Group and Jones Lang LaSalle sank about 12% each on Wednesday, while Cushman and Wakefield fell about 14%. CoStar Group, owner of Apartments.com and Homes.com, fell 5.9%.
“We view market concerns as overstated due to a combination of CRE’s diverse end markets and the non-core nature of real estate activity for many clients,” said Morningstar analyst Sean Sunlop, noting that their valuation is “not cheap” despite the selloff.
Insurance
Insurance stocks were the biggest hit. Consumers and underwriters on both sides of the Atlantic are reeling after online platform Insurify released on Monday an AI-powered comparison tool on ChatGPT, which allows users to compare car insurance rates.
The S&P 500 insurance index fell 3.9% on Monday, the biggest one-day decline since mid-October.
Shares of insurance broker Willis Towers Watson have lost 15% so far this week and are set for their worst week since the pandemic began in March 2020. Aon is down 9% and Arthur J. Gallagher is down 15% this week.
“Ultimately, we believe vendors will trade two-way. Simple insurance products such as term life, personal auto, and home, could see significant AI disruption in the next five years,” said Morgan Stanley equity strategist Bob Jian Huang.
“High net worth consumers will use AI to enhance analytics and improve underwriting, not be driven by it, in our view.”
Trucks and Logistics
Traders likely didn’t see trucking and transportation companies as an AI target, but the sector fell sharply on Thursday.
AI-focused transport company Algorhythm Holdings, which previously sold karaoke machines, said its SemiCab division has increased customer cargo capacity by 300% to 400% “with no increase in operating costs”.
The news began to circulate in stocks such as Landstar System and CH Robinson. The Dow Jones Transportation Average fell 4.4%.
Analysts at Jefferies, however, say the reaction is not connected to fundamentals. “Proprietary data assets and physical networks are always on strong roads,” they said.
(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Additional reporting by Avinash P; Editing by Arun Koyyur)
