“SaaSpocalypse”: AI Disruption Sparks Sharp Selloff in Financial and Software Stocks

Wall Street is no longer just searching for AI winners. It is urgently trying to avoid AI losers.

In a sharp shift in market psychology, investors are dumping shares of companies perceived to be at risk of disruption from artificial intelligence — even before concrete earnings impact appears.

The Trigger: A Startup, a Tool, and a Selloff

The latest wave began Tuesday when startup Altruist unveiled a new AI-powered tax planning tool. The reaction was immediate.

• Charles Schwab fell more than 7%.
• Raymond James dropped over 7%.
• LPL Financial slid sharply in tandem.

For some of these names, it marked the steepest decline since April’s trade-war-driven selloff. Market saw pressure. Fast.

Just a week earlier, software names experienced similar turbulence after Anthropic introduced automation tools targeting legal workflows.

• London Stock Exchange Group plunged 13%.
• Thomson Reuters collapsed 21%.

Analysts at Jefferies labelled the phenomenon “SaaSpocalypse.” The name stuck. And the market noticed.

$611 Billion Erased

The scale is striking. According to market estimates, 164 stocks across software, financial services, and asset management sectors lost a combined $611 billion in market capitalization in a single week.

A portfolio manager at Gabelli Funds summarized the mood bluntly: any company with even a potential disruption narrative is being sold indiscriminately.

Once again, investors are recalibrating expectations — but this time defensively.

“Get Me Out” Trading

Jefferies traders described the tape as “get me out” selling. Not strategic rotation. Not valuation discipline. Just risk avoidance.

The CEO of GraniteShares captured the uncertainty: last year’s story was about believing in AI and searching for applications. Now, as more powerful real-world use cases emerge, the market is confronting the destructive side of that innovation.

Even Altruist’s leadership appeared surprised by the magnitude of the reaction. Traditionally, complex tax planning tasks required full teams. Now AI tools promise to perform similar functions for roughly $100 per month.

Guidance hasn’t changed yet. Multiples have.

From Buying Winners to Avoiding Casualties

The psychological pivot is clear. Earlier in the AI cycle, capital flowed toward perceived beneficiaries — semiconductor firms, cloud providers, infrastructure players.

Now the focus has shifted. Investors are asking a different question:

Which business models become obsolete?

And until there is clarity, broad selling pressure may persist across any sector that appears vulnerable to automation.

Software was first. Financial services followed. The market is now scanning for the next exposed industry.

The AI revolution continues. But on Wall Street, disruption is no longer theoretical — it is being priced in, aggressively.