A new investing logic emerges on Wall Street: sell first any stocks of companies that could be replaced by AI

Wall Street’s anxiety about artificial intelligence has been rising sharply. Investors have started dumping shares of companies seen as vulnerable to AI disruption—ranging from small software providers to major financial firms.

On Monday, Feb. 9, online insurance broker and comparison platform Insurify launched a ChatGPT-powered insurance shopping app. The move coincided with a selloff in insurance brokerage-related stocks, sending the S&P 500 Insurance Index down 3.89%—its largest single-day drop since October.

On Tuesday, Feb. 10, a little-known startup, Altruist, unveiled an AI-driven tax-planning feature. The announcement was followed by steep declines across major financial services names: Charles Schwab fell 7.42%, Raymond James dropped 8.75%, and LPL Financial slid 8.31%. Some of these moves marked the biggest one-day drops since last April’s market turmoil, reinforcing what traders describe as a “sell first, ask questions later” mindset.

For years, rapid progress in AI fueled a powerful rally, pushing indexes to repeated highs. The debate centered on whether the boom was a bubble or the start of a productivity-driven expansion. But since early last week, a wave of new AI product releases appears to have shifted the narrative: investors are no longer focused on picking winners—they’re racing to avoid owning anything that could be replaced.

Gabelli Funds manager John Belton said that any business perceived as at risk of AI disruption is being sold indiscriminately. Graniteshares Advisors CEO Will Rhind echoed the uncertainty, arguing that the market has flipped from “we believe in AI but we’re still searching for use cases” to “the use cases are getting so compelling they feel threatening.”

Altruist CEO Jason Wenk said even he was surprised by the intensity of the market reaction, but he believes it highlights the competitive threat: tasks that once required full teams could increasingly be handled by AI tools at low monthly cost.

Still, how AI adoption plays out remains unclear. Banking, for example, has weathered past tech shocks—crypto, digital services—without losing its core dominance. Belton remains skeptical of the sudden sentiment swing, noting that disruption often takes longer than expected. The pullback may also reflect broader fragility created by elevated valuations: in a richly priced market, even small negative signals can trigger 10% drops. Gerber Kawasaki CEO Ross Gerber argued it’s too early to label “AI victims,” because no one truly knows what the world looks like five years from now.