The AI gold rush has turned into an AI panic! Wall Street's new consensus: avoid all companies that could be disrupted

Wall Street is undergoing a dramatic shift in investment logic: investors are no longer eager to seek out AI winners but are instead rushing to sell off any stocks of companies that could be disrupted by AI. This "sell first, ask questions later" panic is spreading from the software industry to multiple sectors, including financial services, wealth management, insurance brokerage, and legal services, triggering a series of severe sell-offs.The latest wave of selling occurred on Tuesday when a little-known startup, Altruist Corp., launched a tax strategy tool called Hazel, causing the stock prices of wealth management firms such as Charles Schwab, Raymond James Financial Inc., and LPL Financial Holdings Inc. to plummet more than 7% in a single day, marking the largest drop for these stocks since the market crash triggered by the tariff war in April.This panic began last week when a new tool launched by Anthropic triggered a deep correction in the software, financial services, asset management, and legal services sectors. On Monday, after the online insurance market Insurify launched a new application using ChatGPT to compare auto insurance rates, U.S. insurance brokers' stock prices were severely impacted. Market sentiment has shifted from concerns about an AI bubble to fears of entire economic sectors being disrupted.According to a report by Bloomberg on Wednesday, Gabelli Funds fund manager John Belton stated: "Any company that has potential disruption risk is being indiscriminately sold off." Graniteshares Advisors CEO Will Rhind admitted, "I don't know who will be next."Wealth Management Industry Becomes the Latest Hard-Hit AreaThe sell-off triggered by Altruist's AI tool Hazel highlights the market's deep anxiety about AI disrupting traditional financial services. The tool can help financial advisors customize personalized strategies for clients, a task that typically requires an entire team to accomplish.Altruist CEO Jason Wenk expressed surprise at the scale of the stock market's reaction, noting that the sell-off wiped out billions of dollars in market value for several investment firms. However, he believes it sends a strong signal that his company poses a competitive threat."People are starting to realize — the architecture we used to build Hazel can replace any job in the wealth management field," Wenk said, "Typically, these jobs require an entire team to complete, while AI can effectively do it for just $100 a month."Panic Quickly Spreads Across Multiple IndustriesConcerns about AI disruption have been troubling the software industry for some time. However, starting last week, this anxiety rapidly spread to broader sectors. The new tool launched by Anthropic triggered a deep correction in the software, financial services, asset management, and legal services sectors, marking a turning point in market sentiment.The insurance brokerage industry quickly followed as a victim. On Monday, after the online insurance market Insurify launched a new application using ChatGPT to compare auto insurance rates, U.S. insurance brokers' stock prices were severely impacted. The logic for investors is simple: any intermediary service that could potentially be replaced by AI faces a survival threatAI companies like OpenAI and Anthropic have made substantial progress in the field of software engineering, launching products that help developers streamline the process of writing and debugging code, and are expanding into other industries.Market Divergence: Is Disruption Overhyped?Despite the spread of panic, some market participants are skeptical about the speed and scope of AI disruption. Gabelli's Belton questions the significant shift on Wall Street from worrying about an AI bubble to fearing AI's disruption of the economy."Every industry will have winners and losers," Belton said, "but one rule of thumb is that technological disruption often takes longer to materialize than expected." He pointed out that the banking industry has periodically faced challenges from cryptocurrencies, electronic services, and other technologies, but these ultimately failed to shake its dominance.Ross Gerber, CEO of Gerber Kawasaki, believes that the anxiety over AI losers that has plagued some sectors of the market over the past week is premature. "We can try to infer what the AI world will look like five years from now, but we really don't know," he said. "The market is trying to make judgments about this, but we are still in the early stages of all this."High Valuations Intensify Market SensitivityThe current sell-off also reflects a general anxiety in the market about the significant price increases over the past few years. Driven by a surge in AI spending and the unexpected resilience of the U.S. economy, the stock market has risen sharply, pushing valuations higher and making investors extremely sensitive to any negative signals.Rhind of Graniteshares stated, "If the market perceives any slightly negative information, stocks will drop 10%, a situation that would never happen in a market where valuations are not so high."This highly tense market environment means that even products launched by small startups can trigger significant volatility in large publicly traded companies. Investors would rather err on the side of caution than risk being disrupted by AI, and this mindset is reshaping Wall Street's investment strategies