Software and Legal Tech Stocks Plunge on AI Automation Fears

Anthropic’s release of a new AI workplace automation tool triggered a sharp global stock market sell-off this week, wiping about $285 billion in value from software, legal tech and professional services stocks.

Investors fear the tool’s ability to automate tasks traditionally sold as paid software services could erode core revenue streams across the industry.

Anthropic, the AI company behind the Claude chatbot, unveiled 11 open-source plug-ins for its Claude Cowork AI suite on January 30. One key plug-in targets legal workflows, automating contract review, non-disclosure agreement screening and related tasks previously handled by established SaaS platforms.

The market reacted sharply. Stocks of major software and legal tech firms plunged as traders reassessed long-term demand for traditional subscription software. Global software indexes saw some of their biggest single-day declines in years.

Industry analysts described the event as a potential turning point for enterprise software. The automation capabilities showcased by Claude Cowork raised concerns that widespread AI adoption could reduce demand for legacy tools that generate recurring revenue.

Market turbulence spread to broader global indices, though some analysts caution the sell-off was driven more by fear than fundamental shifts.

A simultaneous drop in Indian IT stocks, including Tata Consultancy Services, Infosys and Wipro, reflected investor anxiety about automation risks worldwide.

Despite the market reaction, industry figures point out that many companies hit by losses continue to show solid underlying earnings and are also investing in AI.

The long-term impact of Anthropic’s release remains uncertain, and analysts say volatility could persist as markets digest implication.