When Anthropic unveiled its new suite of business-oriented tools for its Claude large language model (LLM), many in the finance sector anticipated minimal impact on the stock market, especially given that Anthropic is not yet publicly traded. However, the introduction of Claude Cowork—particularly its specialized plugins for industries such as legal, finance, and sales—sent shockwaves through the market, negatively affecting not only Anthropic but also its numerous AI competitors.
A noticeable downturn affected various software-as-a-service (SaaS) companies in the wake of this release. Prominent players like Salesforce, Intuit, and Atlassian experienced substantial market drops, falling by 27.9%, 33%, and 41.6% year-to-date, respectively. Investors expressed concern that business clients might opt for AI solutions instead of maintaining subscriptions to traditional SaaS platforms, leading to reduced expenditures on these software services.
Among the more affected companies was Alphabet, the parent organization of Google. Following the Claude Cowork announcement, Alphabet’s stock saw a decline of over 6% within the week. While not as drastic as the 19.3% plunge experienced by legal database provider Thomson Reuters, this drop is noteworthy for a company that does not directly offer the types of software likely to be impacted by the new AI tools.
Nonetheless, Alphabet maintains a strong foothold in the AI sector, bolstered by its own LLM, Gemini. A significant update to Gemini in November introduced new features that have placed it ahead of competitors like OpenAI’s ChatGPT in certain metrics, particularly following the introduction of agentic AI capabilities. This rollout attracted a surge of paid subscribers, many of whom may have previously used ChatGPT. Investor anxieties have arisen that Claude Cowork could lure these same subscribers away from Google’s offerings.
Despite the grim market sentiment, some expert investors are adopting a contrarian approach. Warren Buffett, a widely respected figure in the investment community, has advised individuals to “be fearful when others are greedy, and greedy when others are fearful.” In line with this philosophy, Buffett’s Berkshire Hathaway has acquired a stake in Alphabet for the first time.
Notable investor Cathie Wood has also taken action in light of the declining share prices, amassing $21.6 million in shares of Alphabet across three of her Ark Invest funds. This includes a newly-created $1.8 million position in the ARK Space & Defense Innovation ETF and a more significant $15 million stake in the flagship ARK Innovation ETF.
With influential investors capitalizing on what they perceive as a discount on Alphabet’s stock, other investors may find it prudent to consider following this trend.
