Global equity markets were jolted into volatility after US-based artificial intelligence company Anthropic unveiled a powerful new set of enterprise AI tools designed to automate white-collar workflows. What began as a product announcement quickly snowballed into one of the sharpest sector-wide sell-offs in recent months, hitting European legal software firms, US technology companies, and Indian IT stocks in rapid succession.

At the heart of the market reaction was a growing fear that artificial intelligence has crossed a critical threshold—moving from a productivity enhancer to a direct substitute for large segments of the software and IT services value chain.

What Did Anthropic Actually Launch?

Anthropic introduced a significant upgrade to its enterprise AI ecosystem through Claude Cowork and Claude Code, positioning them as end-to-end workflow automation platforms rather than conversational chatbots.

The newly released capabilities allow AI agents to independently execute a wide range of tasks, including:

• Reviewing and drafting legal documents

• Checking contracts and non-disclosure agreements

• Creating legal summaries and standard drafts

• Writing, testing, and refactoring production-grade code

• Automating compliance checks, analytics, and internal reporting

• Coordinating multi-step enterprise workflows with minimal human supervision

For in-house legal teams, Anthropic described the tool as a plugin-style extension of its Claude assistant that can handle routine legal work. The company clarified that the system does not provide legal advice and stressed that all AI-generated output must be reviewed by qualified professionals before use.

Despite these disclaimers, markets focused less on what the tool cannot do and more on what it eventually might replace.

Why Markets Panicked Despite the Safeguards

The fear was not about immediate revenue loss—it was about future disruption.

Investors grew concerned that tools like Claude Cowork could sharply reduce dependence on traditional legal research platforms, enterprise software subscriptions, and labor-intensive IT services. More importantly, Anthropic openly framed its new release not merely as an assistant, but as a replacement for repetitive, software-driven white-collar work.

That shift in intent, rather than capability alone, proved deeply unsettling.

European Legal Software Firms Were the First Casualties

The initial shockwaves were felt in Europe, particularly among legal publishing and information services firms. Shares of RELX Plc and Wolters Kluwer NV fell by more than 10 percent after Anthropic released its legal automation tool on GitHub. Pearson Plc also slipped in trading.

These companies derive a significant portion of their revenue from legal research, publishing, and enterprise information services—areas now perceived to be directly in AI’s crosshairs.

The US Market Followed With Heavy Losses

By the time US markets opened, the sell-off had broadened dramatically. Stocks linked to legal research, financial data, and enterprise software were among the hardest hit.

Shares of Thomson Reuters, LegalZoom, and London Stock Exchange Group dropped more than 12 percent. Losses soon spread across the broader software ecosystem, dragging down names such as PayPal, Expedia Group, EPAM Systems, Equifax, and Intuit, each falling over 10 percent in a single session.

Two S&P indices tracking software, financial data, and exchange-related stocks collectively lost nearly $300 billion in market value.

Art Hogan, Market Strategist at B Riley Wealth Management, told The Wall Street Journal that investors are increasingly wary of any company vulnerable to fast-moving AI disruption.

“If things are advancing as rapidly as we hear from OpenAI and Anthropic, it’s going to be a problem. Investors are starting to go after any of the companies that could be disrupted, which is all kinds of software application names,” Hogan said.

Indian IT Stocks Get Caught in the Crossfire

The impact reached Indian markets by Wednesday morning. After Wall Street’s overnight sell-off, sentiment on Dalal Street opened weak, triggering sharp declines in IT stocks.

Shares of Infosys, Tata Consultancy Services (TCS), HCLTech, Tech Mahindra, Wipro, and LTI Mindtree fell as much as 6–8 percent during the day. The Nifty IT index plunged over 7 percent, hitting an intraday low of 35,809.50, before paring losses to close at 36,345.65.

The rout erased an estimated ₹2 lakh crore from the combined market capitalisation of India’s top IT companies.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the sell-off reflected valuation concerns as much as disruption fears.

“The rally fuelled by the US-India trade deal will face hurdles to sustain. The IT selloff in the US yesterday will drag the Indian IT index, too. Since valuations continue to be high, there is no fundamental support for a sustained rally,” he said.

Why Indian IT Is Seen as Vulnerable

Indian IT firms have long relied on headcount-based, linear billing models, where revenue growth closely tracks the size of delivery teams. AI-driven automation challenges this structure directly.

Morgan Stanley analysts, including Toni Kaplan, noted that Anthropic’s expansion into legal workflows heightened competition for companies like Thomson Reuters, calling it a “potential negative,” according to Bloomberg.

Analysts fear that as enterprises adopt AI systems capable of executing complex tasks independently, the need for large offshore vendor teams could decline—putting pressure on billable hours, utilisation rates, and margins.

Structural Disruption, Not Just a Cyclical Dip

Market experts cautioned that the sharp correction should be viewed through the lens of structural change rather than short-term weakness.

Bhavik Joshi, Business Head at INVasset PMS, said markets are still digesting a fundamental shift in how enterprise value is created.

“AI is no longer augmenting services—it is beginning to replace large portions of traditional, labor-intensive workflows,” he said.

Joshi highlighted that AI platforms are now executing complex SAP migrations and enterprise transformations in weeks, tasks that previously took years of human-led effort.

“This is not incremental automation. It represents a fundamental compression of time, cost, and manpower across core enterprise processes.”

Threat to Entry-Level Talent and Service Models

Systematix Group analyst Ambrish Shah warned that Anthropic’s advanced AI systems could disrupt the entry-level talent pipeline at Indian IT firms by replacing routine development and testing tasks.

As Indian enterprises integrate Claude into critical coding workflows, dependency on large vendor teams may decline, squeezing margins for traditional service providers.

Is There a Silver Lining Amid the Chaos?

Despite the anxiety, several analysts urged investors not to confuse disruption with destruction.

Joshi noted that technology adoption often accelerates during periods of macro uncertainty, as enterprises seek speed, predictability, and scalability.

“What equity markets are pricing is near-term earnings visibility. What enterprises are investing in is long-term operational resilience.”

He added that history shows sharp tech stock drawdowns often occur at moments of inflection—when old delivery models are questioned but new ones are not yet reflected in financial statements.

“The current correction appears less a signal of declining relevance and more a reflection of markets struggling to price a rapid shift in enterprise value creation.”

Market Reaction May Be Overdone

Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara, described the sell-off as largely sentiment-driven.

“AI will disrupt pricing and delivery structures, but it will also expand the addressable market for early movers,” he said.

He expects short-term volatility as investors reassess margins but believes AI-adopting IT firms will outperform in the medium term.

Similarly, Sumit Pokharna, Vice President of Research at Kotak Securities, called the crash a “knee-jerk reaction,” noting that Indian IT companies operate at a service-provider level and may be relatively shielded until AI models become deeply customisable.

What Investors Should Take Away

The Anthropic-triggered sell-off was not about an immediate collapse—it was a repricing of risk.

Key lessons emerging from the carnage include:

• Software and IT services are being challenged, not rendered obsolete

• AI-native companies are likely to command valuation premiums

• Headcount-heavy models will face increasing scrutiny

• Volatility will remain elevated as AI capabilities evolve rapidly

• Long-term winners will adapt their business models rather than resist change

The Bigger Picture

For the first time, markets are treating AI as a zero-sum force—one that creates winners and pressures incumbents. The sell-off sparked by Anthropic’s AI tool marks a turning point in how investors perceive the future of software, IT services, and enterprise value creation.

For Indian IT firms, the message is clear: the era of linear growth is ending. The next phase will reward those who integrate AI deeply into delivery models, pricing structures, and client outcomes.

The panic may fade—but the transformation will not.

With inputs from agencies

Image Source: Multiple agencies

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