Data Services Stocks Plunge After Anthropic Releases New Legal AI Tool

Anthropic announced the release of a new legal AI tool yesterday, sending data services and legal software stocks plummeting.

Anthropic, a privately-owned American AI company, is known for their large-language model, Claude, which competes with others like OpenAI's ChatGPT and Google's Gemini. With a valuation in the hundreds of billions, Anthropic is one of the world's most successful private AI corporations, having secured major contracts from Big Tech companies like Amazon, Nvidia, Google, and Microsoft.

Now, Anthropic is making waves in a different section of the market– legal software. The company's new AI tool can be used as a plugin for Claude Cowork, a program that can automate multi-step tasks, read files, and complete certain jobs, acting as a 24/7 AI employee for those who use it.

With this new tool, legal departments can automate time-consuming legal work, particularly tasks like reviewing contracts, non-disclosure agreement (NDA) triage, and compliance workflows. Anthropic did confirm, though, that the AI is still in its beta stage, and it has been released to Claude Cowork users as a research preview. They have also advised that the AI can make mistakes that affect legal decisions and should receive oversight from a qualified professional before being used in official work.

Nevertheless, the announcement of Anthropic's new tool sent legal software stocks plummeting– with the future development of Anthropic's AI, it could significantly impact their business and possibly even remove their products from the picture altogether. With an artificial intelligence program that reads documents and provides tailored feedback to the exact needs of the lawyer, they would no longer need complex software programs.

Many software companies are already incorporating AI into their existing platforms, but the growth of Anthropic's tool could remove the need for such platforms in the first place. At best, Anthropic is still expected to eat into the profit margins and revenue numbers of these corporations.

Canadian software conglomerate Thomson Reuters plummeted 18%, while Dutch software services company Wolters Kluwer fell over 13%. As a whole, the London Stock Exchange Group plunged 13%. In the United States, FactSet Research Systems fell 10.5%, while technology services corporation Accenture saw its stocks slide by 9.5%.

Furthermore, the release of Anthropic's tool didn't just send legal software stocks dropping– it sent global software markets falling. The move represented a wider change in sentiment which some described as a "wake-up call," with investors realizing that corporations like Anthropic will only continue to produce more advanced AI models in different fields of the market.

Legal may have been one of the first, but other industries like consulting, finance, and data analytics may be next– many investors are beginning to think that certain software companies may just go down from here.

However, software corporations that are able to keep up with the change – integrating AI into their programs and popularizing it among their customers – could fight back against all-around AI tools, allowing them to remain relevant.

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