Remember when AI was going to make us all rich? Yeah, well, Wall Street got the memo that maybe robots taking everyone’s jobs isn’t actually bullish for the economy. Who could have seen that coming?
The tech sector is currently having what can only be described as an existential crisis. Software stocks are getting absolutely demolished after some fancy AI updates from Anthropic made everyone realize that, hey, maybe this whole “AI will replace knowledge workers” thing is actually happening. Even Nvidia’s stellar earnings couldn’t calm the nerves – when the golden child of AI can’t rally the troops, you know things are getting weird.
Business Insider chatted with three investing pros to figure out where this AI-induced market meltdown might spread next. Spoiler alert: nowhere is safe.
Private Credit: The “Death Bomb” Nobody Saw Coming
Here’s where things get spicy. Daniel Newman from Futurum dropped the phrase “death bomb” when talking about private credit, which is finance-speak for “this could get really ugly, really fast.”
Think about it: all these AI companies needed massive amounts of cash to build their digital empires. When banks said “nah,” private lenders stepped in with their checkbooks. Now that AI hype is souring, those loans are looking about as safe as a chocolate teapot.
The drama around Blue Owl Capital has everyone getting 2007 flashbacks – you know, that fun time right before everything went sideways. When Jamie Dimon starts making ominous comparisons to the financial crisis, it’s time to pay attention.
Big Banks: Plot Twist, They’re Not Safe Either
You might think traditional banks are sitting pretty while private lenders sweat, but nope! These institutions have been gorging themselves on private credit deals like it’s an all-you-can-eat buffet. Plus, banks themselves are prime targets for AI disruption – turns out loan officers might be just as replaceable as everyone else.
Physical AI: The Industrial Reckoning
Here’s where it gets really interesting. While everyone’s been obsessing over ChatGPT writing emails, physical AI – think robots in warehouses and self-driving trucks – is quietly preparing to revolutionize entire industries.
Paul Meeks expects this to be “fast and furious,” which sounds exciting until you realize your industrial stock portfolio might be about to get steamrolled by a very polite robot.
The irony? As investors fled tech stocks, they piled into “safe” cyclical plays like industrials and consumer staples. Turns out those “AI-immune” sectors might not be so immune after all.
Software: Still Not Done Falling
The software carnage isn’t over. Companies that went public during the SaaS gold rush and do one specific thing really well? They’re basically sitting ducks for either acquisition or extinction. When AI can do your entire business model better, faster, and cheaper, that’s what we call a “career-limiting event.”
The bottom line: this AI panic isn’t just a tech problem anymore. It’s spreading through the financial system like gossip at a high school reunion, and nobody’s quite sure where it stops. Buckle up – it’s going to be a bumpy ride.