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“Claude, how can we convince investors to calm down?” First it was services and software companies, then security and now IBM. When Anthropic opens its (thankfully metaphorical) mouth, markets move.
Over the past month, a swathe of new features and preview products have sent share prices spiralling downwards for the industries impacted, though whether or not that makes any sense remains to be seen.
It started when the AI developer unveiled a set of plugins for Claude Cowork that promised to turn its model into a specialist in everything from customer support to productivity and even legal.
“A sales plugin, for example, could connect Claude to your CRM and knowledge base, teach it your sales process, and give you commands for everything from prospect research to call follow ups,” the company said in a blog post. “You define what goes in the plugin once, and Claude pulls from that context whenever it’s relevant.”
The markets clearly thought that was big news. Legal services giant Thomson Reuters fell 18% to its lowest price in five years, with similar share slides posted by rival legal data firms. The S&P 500 software and services index fell 5%. Professional services firms such as Experian and Sage also saw a share drop, as did advertising companies.
Anthropic did it again this week, launching a limited research preview for Claude Code Security, a new tool for hunting out flaws and suggesting targeted patches. In its own tests, Anthropic said it found more than 500 bugs in open-source codebases that had gone “undetected for decades, despite years of expert review”.
Despite the tool remaining very much in the works, cyber security firms’ stock prices stumbled hard. Reuters reported that Crowdstrike, Datadog and Zscaler each fell 11%. Fortinet and Okta crashed 6% and Palo Alto and SentinelOne slipped by 5%.
And then there’s IBM. Also this week, Anthropic posted a blog saying its AI could help manage COBOL modernisation, letting companies still using the decades-old legacy language analyse their systems and upgrade them to newer platforms.
“With AI, teams can modernize their COBOL codebase in quarters instead of years,” the company said.
That post gave IBM its biggest share drop since October 2000, falling 13.2%, according to Reuters.
Now, IBM very much disagrees, saying AI can’t handle all of the hard work of modernizing systems. “Translating code is one thing,” wrote Rob Thomas, Senior Vice President, IBM Software and Chief Commercial Officer, in a post. “Modernizing a platform is something else entirely. The two are not the same, and the gap between them is where most enterprises run into trouble.”
Investors are getting twitchy. It’s clear the markets are deeply unsure about the impact of AI on any of these businesses and sectors.
At the time of writing, IBM had started to recover, up nearly 5% the day after the price crashed. But Thomson Reuters has yet to significantly regain its position; that said, some analysts are now rating it as undervalued.
And some analysts are bewildered by the strong reactions. At the time the plugins were announced, Mike Archibald, a portfolio manager at AGF Investments in Toronto, told Reuters: “Sometimes the market just shoots first and asks questions later.”
Regarding the software selloff, JP Morgan’s Executive Director for global investment strategy Kriti Gupta wrote in a detailed post that the “market is selling indiscriminately” due to “broken logic”.
Adam Turnquist, LPL Financial’s Chief Technical Strategist, said that markets were imagining a “worst-case scenario” rather than considering the actual reality of revenue and performance.
“What you’re seeing today is really the continuation of a panic-driven, narrative-led selloff,” Shrenik Kothari, Director and Security and Infrastructure Analyst at Robert W. Baird, told Reuters in response to this week’s security share slide.
There’s much more to security than spotting flaws and patching them. Legal and professional services firms do more than any plugin can manage.
And while AI tools to address COBOL might be handy, there’s more to mainframes and IBM than just legacy code. In fact, AI might eventually help all these companies be more efficient at what they do, helping the bottom line and eventually leading to higher profit – and share prices.
In short, everyone has gone bonkers and not even the people with money have any idea what’s about to happen because of (or in spite of) AI.
