Illustration by Tag Hartman-Simkins/Futurism. Source: Michael M. Santiago/Getty Images
Last week, Anthropic Issued A new AI tool for automating legal work has triggered a massive selloff in the stock market on fears that the technology could overwhelm giant software clients in industries ranging from law to finance, reuters reports – An urgent example of the current power of AI over financial markets and even the larger economy.
The S&P 500 Software and Services index fell nearly nine percent in five trading sessions, and is down more than 20 percent from its October peak after the release of the AI tool. The Nasdaq 100 index also disappointed, falling about 2.6 percent.
Thomson Reuters, Reuters’ The parent company, which operates a large legal division, saw its stock fall more than 20 percent in five days. SaaS heavyweight Salesforce and global cloud-based cybersecurity firm CrowdStrike both declined about a percent each, but recovered on Wednesday.
The stock’s decline is indicative of strained fears over AI automation’s ability to disrupt entire industries, and particularly those focused on knowledge work – despite the technology still having considerable shortcomings.
“We’re not yet at the point where AI agents will destroy software companies, especially given concerns about security, data ownership and use,” said Ben Barringer, head of technology research at Quilter Cheviot. reuters,
The discussion focused on a new plugin for Anthropic’s Cloud Cowork AI Agent, which was released last month. simply titled “legal,” anthropological They say It can also speed up and automate contract review, non-disclosure contract triage and compliance workflows – “all configurable to your organization’s playbook and risk tolerance.” Of course, nothing it produces should be construed as legal advice: “All output should be reviewed by licensed attorneys,” warns Anthropic.
Nonetheless, this was taken as bad news for the legal division everywhere, the shock of which was felt in the broader market. Morgan Stanley analysts summarized the concerns in a note to Thomson Reuters: “Anthropic launches new capabilities for its cowork in the legal sector, increasing competition,” they wrote. “We see this as a sign of increased competition and thus a potentially negative signal.”
There is still considerable doubt over the effectiveness of AI agents in the workplace. An MIT study found that companies that integrated AI into their workflows saw no meaningful increase in revenue, while analysts observed no jump in productivity due to the tools. Its introduction into the legal field has been particularly risky, with several lawyers finding themselves in dispute with a judge after their AI tools incorrectly cited sources and fabricated caselaw. Perhaps AI agents will find some general-purpose use among white-collar workers, but they have a long way to go before they can understand highly specialized fields.
“It seems like an illogical leap to move forward with cloud cowork plugins, or any similar personal productivity tools, with the expectation that every company will write and maintain a specialized product to replace every layer of mission-critical enterprise software,” JPMorgan analyst Mark Murphy explained. reuters.
Still, it is undeniable that the market is booming because of AI.
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