Remember last week when AI sent software stocks into a tailspin? Well, grab some popcorn because artificial intelligence just found its next victim: your friendly neighborhood brokerage firms.
Here’s what went down on Tuesday: A company called Altruist dropped news about their shiny new AI tool called “Hazel” that can whip up tax planning strategies in minutes. Sounds cool, right? Wall Street didn’t think so.
The market basically had a collective “oh crap” moment, realizing that if AI can handle tax planning this easily, what else is it coming for? Cue the brokerage bloodbath:
- LPL Financial got absolutely wrecked, down 11%
- Charles Schwab wasn’t far behind at -10%
- Raymond James dropped 9%
- Even the brokerage ETF took a 4% hit
Now, before you panic about your Schwab account, let’s break down what’s really happening here. This isn’t necessarily about AI stealing your broker’s lunch money tomorrow. It’s about investors getting spooked by the possibility that cheap AI tools could eventually muscle in on the financial services game.
Think about it: if an AI can crunch tax strategies faster than your CPA after three espressos, what’s stopping it from handling other financial tasks? Portfolio rebalancing? Investment advice? Explaining why your meme stock picks aren’t “diversification”?
The fear is real, but here’s the thing – this feels awfully familiar. Just last week, the entire software sector had a meltdown when Anthropic rolled out some legal-focused AI tools. Everyone freaked out, stocks crashed, and then… the market mostly recovered. Analysts are already calling it a “buy the dip” moment.
Interestingly, the institutional-focused brokers like Interactive Brokers and Morgan Stanley didn’t get hit as hard. Translation: Wall Street thinks AI is more likely to disrupt retail investing than the big-money institutional game. Makes sense – it’s probably easier to automate “Should I buy Apple?” than “How do we structure this $500 million merger?”
Meanwhile, OpenAI just casually announced they’re integrating insurance quotes into ChatGPT. Because apparently, we needed another reason for traditional financial firms to lose sleep.
Look, AI disruption is real, and it’s coming for a lot of industries. But markets have a habit of overreacting to every shiny new tech announcement. Remember when everyone thought the internet would kill retail? Amazon did pretty well, but your local coffee shop is probably still there too.
The smart money isn’t panicking – they’re watching to see which companies adapt and which ones get left behind. Because in the end, whether it’s AI or any other innovation, the winners are usually the ones who figure out how to use the new tools, not the ones who pretend they don’t exist.
So while your brokerage stocks might be having a rough week, don’t write their obituary just yet. After all, someone still needs to explain to people why their portfolio is down 20% – and I’m not sure AI is ready for that level of emotional support.