Recent market volatility has been fueled by growing fears of artificial intelligence disruption, sparked by commentary from AI entrepreneur Matt Shumer. Shumer’s article detailing advancements in AI coding capabilities has resonated with investors, prompting concerns about the potential displacement of workers and the broader economic implications. This has led to a sell-off in tech stocks both on Wall Street and the ASX, impacting software, data, consulting, freight, online marketplace, and commercial real estate sectors.
Despite the widespread sell-off, major indices like the S&P 500 and ASX 200 remain relatively close to their record highs. However, underlying fragility is evident, with a significant percentage of stocks experiencing substantial declines. Bespoke Investment noted rapid shifts from overbought to oversold conditions on Wall Street, while Chanticleer data showed a similar pattern in the Australian market, with 23 per cent of the ASX 200 falling considerably since the start of the month.
JPMorgan’s analysis reveals a shift in Australian fund manager preferences away from stocks like Pro Medicus, Cochlear, REA Group, and Xero, which have experienced recent declines. Meanwhile, WiseTech, a logistics software company that provides solutions for the global supply chain, has gained favour among fund managers. CSL, a global biotechnology company that researches, develops, manufactures, and markets a range of biotherapies and vaccines, also remains widely held despite a recent fall.
Market volatility is expected to continue, influenced by factors such as the upcoming release of DeepSeek’s latest AI model and potential shifts in investment strategies among major tech companies. While bears currently focus on the potential for AI disruption, a change in narrative could occur if a major player announces a reduction in AI investment.
