Global stock markets were shaken last week after US artificial intelligence firm Anthropic unveiled a new set of AI tools aimed at corporate legal teams. The announcement reportedly triggered sharp declines across European legal software companies, US technology firms and Indian IT stocks, as investors worried about the potential disruption to traditional legal research and software services.

Claude Cowork, introduced earlier in January, is an agentic AI assistant aimed at non-technical professionals. It can read files, organise folders, draft documents and execute multi-step tasks with user consent. The launch of 11 plugins on January 30 included one designed for legal workflows, which triggered particular alarm among investors.

The new plugins allow firms to tailor Claude to specific job functions, automating workflows across productivity, sales, marketing, finance, customer support and biology research. The company stressed that the tool does not provide legal advice and insisted that all AI-generated content must be reviewed by qualified lawyers before use. Despite these assurances, investors reacted strongly, fearing that such automation could reduce demand for established legal software platforms.

Market impact in Europe and the US

Shares of European publishing and legal software giants RELX Plc and Wolters Kluwer NV reportedly fell by more than 10%, while Pearson Plc also slipped. In the United States, Thomson Reuters, LegalZoom and the London Stock Exchange Group dropped over 12%. Losses spread across the wider technology sector, with PayPal, Expedia Group, EPAM Systems, Equifax and Intuit all sliding more than 10%.

Two S&P indices tracking software, financial data and exchange-related stocks together shed nearly $300 billion in market value.

Market analyst Art Hogan of B Riley Wealth Management told The Wall Street Journal that investors are increasingly cautious about companies vulnerable to rapid AI advances. 

Indian IT stocks slip

The shockwaves reached Indian markets by Wednesday morning. Shares of Infosys, Tata Consultancy Services (TCS), HCLTech, Tech Mahindra and Wipro all fell sharply, dropping as much as 6% in early trading. Analysts noted that the selling pressure was largely imported from overseas, with US market sentiment spilling over into Dalal Street.

Anthropic’s rapid growth

Anthropic’s growth trajectory has underscored investor concerns. Claude Code reached $1 billion in annualised recurring revenue by November, just months after its May launch. The company is reportedly raising $20 billion at a $350 billion valuation, up sharply from $61.5 billion in March 2025. The speed of iteration has also impressed observers: Cowork launched on January 12, and plugins followed less than three weeks later—far faster than typical enterprise software release cycles.

What it means for Indian IT

The sell-off does not suggest Indian IT firms are failing, but it highlights investor demand for clear evidence that companies can adapt quickly to the AI era. Most major Indian IT firms are already investing heavily in cloud computing, automation and AI-led services. The sector remains one of India’s most globally competitive industries, backed by strong talent, scale and long-standing client relationships.

Shares in Thomson Reuters plunged more than 15%, RELX—owner of LexisNexis—fell 14%, and LegalZoom dropped almost 20%. A Goldman Sachs basket tracking US software stocks recorded its steepest one-day decline since last April’s tariff-driven slump. The Nasdaq fell 1.4%, while Indian IT majors were also hit, with Infosys ADRs sliding 5.5% and Wipro down nearly 5%.

Why investors panicked

Analysts noted that the plugin is essentially a structured set of prompts rather than a proprietary legal reasoning engine. The concern is that Anthropic has shifted from selling its model as an Application Programming Interface (API) to delivering ready-made workflow solutions, effectively competing with established providers. “Trading is very much get-me-out style selling,” said Jeffrey Favuzza of Jefferies, which coined the term “SaaSpocalypse” to describe the rout. The brokerage added that OpenAI appears to be losing ground in the corporate market to Anthropic, with enterprises now accounting for 80% of Claude’s business.