Explained: What is Anthropic AI tool that panicked Wall street, wiped $285 billion off software stocks overnight

What is Anthropic AI tool?

Global stock markets were rattled after a US artificial intelligence firm, Anthropic, released a new set of AI tools for corporate legal teams. The announcement, made last week, led to sharp sell-offs across European legal software companies, US technology firms, and Indian IT stocks.

The brutal sell offs, what some are calling a 'SaaSpocalypse' wiped out roughly $285 billion from software, legal, tech and financial services stocks in a single trading session.

What is Anthropic AI tool?

Anthropic introduced a new AI tool called Claude Cowork along with 11 plugins on January 30. These plugins help automate everyday business tasks. Although, one plugin, focused on legal work, caused a major stir among investors.

Claude Cowork is an AI assistant that can perform tasks on your computer automatically, like generating reports or organizing files, without needing detailed instructions. Built on Anthropic’s Claude AI, it allows even people without coding experience to automate complex workflows.

Claude Cowork is an agentic AI assistant that Anthropic launched earlier in January. Think of it as Claude Code - the company's developer-focused coding tool - but redesigned for non-technical professionals. It can read files, organize folders, draft documents and carry out multi-step tasks with user consent.

The plugins let company tailor Claude to specific job functions by specifying how work should be done, which tools and data to pull from and what workflows to automate. Out of these 11 plugins, the legal plugin that spooked markets. It automates contract review, NDA triage, compliance checks and legal briefings. Anthropic was careful to note that all outputs should be reviewed by licensed attorneys and that the tool does not provide legal advice. That disclaimer, however, did little to calm investors.

Why triggered the market panic?

Wall Street is nervous that AI tools like Claude’s new plugins will challenge existing software companies’ data analytics and research products. Companies that use AI to automate and build their own tools might need fewer subscriptions to external research and data services, directly hurting software companies’ bottom lines.

According to a CNN report, the jury is still out on whether AI tools can ultimately decimate the software industry. But investors were spooked on Tuesday, selling off shares in legal and financial software and services companies.

An exchange-traded fund tracking the software industry slumped 5.69% on Tuesday and had its worst day since April. It was down 1% on Wednesday.

Thomson Reuters (TRI) plunged 15.83% on Tuesday, its biggest single-day drop on record; and Legalzoom.com (LZ) sank 19.68%. Those stocks rebounded slightly on Wednesday, each rising more than 1% as investors stepped in to buy the dip. European companies felt the pain too: London-based RELX, which owns data analytics company LexisNexis, fell 14% Tuesday and was down 1.5% on Wednesday, CNN reported.

The sell-off spread on Tuesday, as Wall Street reckoned with the potential for AI to eat into other companies’ business models. FactSet (FDS) fell 10.51%. Meanwhile, financial firms with funds invested in software companies sold off as well. Blue Owl (OWL) shares fell 9.76% on Tuesday.

The damage extended well beyond legal tech. DocSign fell 11%, Salesforce dropped nearly 7%, Adobe slid 7% and ServiceNow declined 7%. Business development companies with exposure to software loans also got caught in the selling. Blue Owl Capital Corp fell 13%, marking a record ninth consecutive decline.

The sliding stocks will likely only amplify concerns over AI-related job losses. Anthropic CEO Dario Amodei has warned AI will cause “unusually painful” disruption to jobs, arguing “AI could displace half of all entry-level white-collar jobs in the next 1–5 years.” However, other tech and business leaders have painted a less extreme picture of how AI could impact jobs.