A sharp and sudden sell‑off has rattled the global services sector in recent weeks, as investors reassess the resilience of traditional business models in the face of increasingly capable AI tools. The trigger this time came from Anthropic’s latest upgrade to its Claude “Cowork” agent—a suite of AI tools designed to handle complex professional workflows previously thought to be the mainstay of many businesses. Its release sent shockwaves across software, data analytics and professional services firms, erasing billions of pounds in market value.
Legal, data and enterprise software providers found themselves at the epicentre of the slump with companies in the US, Asia and UK all falling as investors reacted to the broadening threat of AI‑driven workflow automation. A number of well-known names have weighed in on the argument, with Nvidia’s boss Jensen Huang dismissing the reaction as illogical, rolling out the traditional defence that AI is more likely to enhance rather than replace enterprise software. Analysts, however, argue the panic reflects deeper uncertainty: if AI agents can perform tasks once sold as high‑margin subscription services, future revenue models may need to be rewritten.
One of the UK’s best known fund managers Nick Train has also had his say, citing the sell-off as purely speculative in most cases, with markets ignoring the fact that large language models such as Claude will need businesses’ data to be effective in the first place, thus actually leaving data-rich businesses with the upper hand. These are undoubtedly worrying times, with rising fears over the long-term effect that AI will have on both businesses and jobs. Markets have reacted as they often do, by shooting first and asking questions later, but until investors gain clarity on who the AI winners and casualties will be, the volatility will likely continue.
Capital at risk.
