"AI Disruption Panic" or "Feast of Short Selling" Triggered by Anthropic Plugin? Analysts Warn: Overly Panic is Killing Quality Assets

Recently, a software stock market crash storm sweeping Wall Street is underway. This week, when Anthropic PBC released a new productivity tool, triggering a widespread decline in software, financial services, and asset management stocks and dragging down the overall market, these concerns became particularly prominent. Short sellers are making a lot of money in this wave, and at the same time, some market analysts believe that the current panic is excessive. This week, Anthropic, known for its chatbot Siasun Robot & Automation, quietly announced that its Cowork feature will launch a plugin that can "accelerate contract review, NDA screening, and internal legal team compliance processes." Wall Street's reaction was extremely fierce, triggering a $300 billion stock market massacre. Concerns about the advancement of artificial intelligence technology disrupting traditional software business models have led to a 20% overall decline in software and AI-related company stock prices this year. For investors betting on a decline in this sector, this is a "feast." According to S3 Partners LLC data, this means up to $24 billion in unrealized profits for investors shorting this sector. This is a phenomenon unique to the software sector; the broader 'Big Seven' in the US stock market as a whole are basically holding steady, S3 research director Leo Gross wrote in a report to clients. In recent months, as the market became increasingly concerned that AI would harm the core business of software industry companies, investors have been selling software stocks. With no sign of the downturn easing, short sellers are increasing their bets on this sector, expecting more downward potential in the future. According to S3 Partners data, short positions in stocks including Microsoft, Oracle, Broadcom, and Amazon are on the rise. According to S3 data, short positions in Microsoft have surged by 20% this year, while Oracle has increased by 10%. Short positions in Broadcom and Amazon have also grown. This marks a shift in the typical operations of shorts in the current downtrend, especially in Microsoft's stock. "Historically, this software giant 'acts like a reversal stock, shorts will cover during the decline'," Gross said, "But now, its trading behaves like a momentum-driven, struggling stock, and shorts are taking advantage of its weakness to increase their short positions." "Software doomsday theory" is excessive panic Amid the Wall Street "software doomsday theory," financial analyst Dave Lee expressed a different view, calling this frenzy "absurd" and warning that AI disruption fears are killing high-quality assets. On Tuesday, software stocks experienced a widespread sell-off, with Jefferies analysts calling it "SaaS Doomsday." The market seems to have finally "confirmed" long-standing concerns: even if these software companies will not disappear, their profit margins will be severely affected. However, both of these assumptions are premature. "This is the most illogical thing in the world," said NVIDIA CEO Jensen Huang in response to the sell-off. Market panic overlooks the reality of enterprise technological applications: while general AI capabilities are improving, better AI does not mean a decrease in demand for specialized software. Anthropic's AI can browse legal documents, but it cannot replace the risk management, workflow integration, clear delineation of duties, and system integration capabilities of tools built specifically for legal tasks. When problems arise, what enterprises need is a professional support team on call. More importantly, for Anthropic, trying to replace specialized software companies would be self-destructive, rather than transforming them into customers. There is no need to disrupt the plummeting large companies like Relx Plc in the UK or Experian Plc in Ireland. The fastest and most sustainable path to profitability is to sell AI technology to them and inject new features into their trusted services. The same goes for SAP, ServiceNow, and New Relic. Huang has also made similar remarks: "There is a view that tools are declining and being replaced by AI. Would you use a screwdriver, or invent a new one?" As for the future of specialized software, Canva provides a vivid example: this professional tool for designers integrates AI as a feature, not a core product. Similarly, the programming platform Replit offers a much more comprehensive application development platform than Anthropic's Claude Code, but its underlying model is based on Anthropic's. Dave emphasized that traders always overestimate the ability of tech companies to solve highly specialized problems. But the market should remember the plummeting of stocks related to Amazon entering the healthcare sector, or the grocery stocks plummeting when it announced disrupting the retail industry, a more classic example being when Meta announced the launch of a social dating feature, causing Match Group's market value to evaporate by 20% in a day. AI may be different, and its disruptive potential may be greater, but that doesn't mean knee-jerk reactions suddenly become reasonable. The software industry is at risk of disruption, as with the impacts brought by the internet and mobile computing. But there are winners and losers in every disruption, with software stocks being "sentenced without trial," as put by JPMorgan analyst Toni Ogg. This panic mentality is contagious. Before this week's SaaS sell-off, the gaming sector experienced a similar storyline: after Google announced the AI project "Genie" that can generate interactive experiences in real-time, gaming companies collectively lost around $40 billion in market value. Take-Two Interactive's stock price has since fallen by nearly 8%. In addition, whether AI can greatly improve cost efficiency and creative ambition for gaming companies, thinking that Google's generation tool can threaten the creative genius behind "Grand Theft Auto" is akin to firing Steven Spielberg due to the advent of a new camera. Dave reiterated that whether in SaaS, gaming, or any industry affected by AI, the fundamental problem is that Wall Street has not yet adapted to the AI era mentally. The market excessively panics about bad news and excessively gets excited about good news. Part of the reason is the excessive hype generated by AI companies themselves - even among the most staunch supporters of AI, many believe that the "doomsday prophecy" against software is baseless and cannot withstand scrutiny.