It’s not just tech stocks that are in the crosshairs. Losses were imposed on non-tech companies too, as investors became paranoid about how much damage AI might inflict upon sectors like trucking, real estate, and finance.
“It’s perhaps indicative of the state of markets at the moment that a $6 million market cap company that until recently specialized in karaoke helped wipe tens of billions off logistics stocks to add to the weakness. I’ve seen some shocking karaoke performances in my time, but this perhaps tops them all,” Reid told clients.
In theory, AI should allow companies to do more with fewer workers, thus boosting their earnings per share—so it is puzzling that traders are dumping stocks that might be boosted by AI. Deutsche Bank’s Reid noted that much of the selling driven by these anecdotes was purely speculative. “The market continues to price in further AI disruption across industries, sometimes in the most abstract way.”
For that reason, analysts on Wall Street this morning are suggesting that the selloff may be coming to an end.
“We think that the AI immunity trade is getting overdone, especially in the financials sector. Many of the trade’s stock market casualties will survive and boost their productivity and profits using AI,” Ed Yardeni of Yardeni Research argued.
Thus far, there is little evidence that AI adoption is reducing employment outside the tech sector. Pantheon Macroeconomics’ Samuel Tombs and Oliver Allen looked at employment in the industries most likely to be affected by AI and found little effect on jobs. “Payrolls across these sectors … fell merely by 2,000 on average in the six months to December, [and] the trend in employment in these sectors collectively improved in 2025 compared to 2024.”
“AI’s biggest impact for now probably is the extra uncertainty it is creating for businesses, at a time when unpredictable federal government policies already cloud the outlook. But AI is not reliable or advanced enough yet to replace many existing jobs,” they said.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
