Why did the new tool from Anthropic, which crushed software stocks on Tuesday, have such a powerful impact?

A routine update in the field of artificial intelligence has triggered a violent shake-up in the legal software sector.

Last Friday, Anthropic launched a legal plugin for its Claude Cowork AI agent, which triggered a collective plunge in related stocks on Tuesday, with several individual stocks dropping more than 15%.

The new tool developed by the Claude AI chatbot can perform multiple clerical tasks, including tracking compliance issues and reviewing legal documents. These functions are at the core of many legal software products.

Morgan Stanley analysts, including Toni Kaplan, wrote in a report on Thomson Reuters:

Anthropic has launched new features for its Claude Cowork AI agent in the legal field, intensifying competition in this area. We see this as a sign of increased competition, which may have negative implications.

The initial wave of sell-offs on Tuesday was primarily concentrated on stocks related to legal and data service technologies, followed by a decline in most software and fintech sectors. Due to growing concerns about the stocks of business development companies and large alternative investment firms on Wall Street that generally hold software businesses, these companies' stocks were also severely impacted.

On that day, the total market capitalization of stocks in the software, financial services, and asset management industries evaporated by approximately $285 billion. Wolters Kluwer plummeted 13%, RELX Group fell 14%, LegalZoom.com dropped nearly 20%, and Thomson Reuters declined by 15%.

(LegalZoom.com dropped nearly 20%)

These stocks have cumulatively fallen at least 20% so far in 2026, with the gradual decline since the beginning of the year accelerating sharply after the release of the Anthropic legal plugin. Analysts believe that although the threat of AI disruption has been factored into Wall Street's outlook for 2026, investors remain highly vigilant about the impact brought by AI agents.

Claude's Market Position in Professional Fields

In the fiercely competitive AI market, Claude has become the preferred tool for many legal and financial professionals for analytical work.

The legal tools offered by Anthropic on its plugin website claim to automate tasks such as contract review and legal briefs. The website also notes, "All output results should be reviewed by a licensed attorney."

The model built by Anthropic can be customized according to the specific needs of the industry. As a major model developer in the artificial intelligence ecosystem, Anthropic has a unique advantage in disrupting traditional legal news and data services, as well as emerging enterprises in the legal AI field.

According to Business Insider, well-known short-seller Andrew Left stated last year that he used the tool while researching for an upcoming lawsuit

Traditional Legal Information Giants Under Pressure

Among the stocks affected on Tuesday, only LegalZoom specializes in the legal industry, helping clients streamline tasks by providing guides and independent attorney services.

The UK IT group RELX has entered the legal field through its legal data and analytics platform LexisNexis. Thomson Reuters' legal business comes from its owned legal research platform Westlaw. The Dutch company Wolters Kluwer also has a presence in the legal information services sector.

Analysts believe that as AI technology continues to advance, investor confidence in the legal publishing industry may be further undermined.

Even before Anthropic launched its plugin, several startups, including Legora and Harvey AI, had introduced a range of tools to the legal industry, claiming these tools could help lawyers escape tedious work.

For the past two years, investors have been pouring significant capital into AI products in the legal sector. Harvey AI reached a valuation of $5 billion in June, while Legora's financing valuation also hit $1.8 billion in October.

Software Stocks Already on Edge

For months, investors have been closely monitoring the software industry, guarding against potential business risks posed by AI.

In January of this year, Anthropic released another product, the Claude Cowork tool, which heightened investor concerns.

Last week, Alphabet began rolling out the Project Genie initiative, which can create immersive game worlds through text or image prompts, impacting video game stocks as well.

There are also other signs that software companies are lagging behind other tech firms.

Data compiled by Bloomberg shows that so far in this earnings season, only 71% of software companies in the S&P 500 have reported revenues exceeding expectations, while the overall tech sector's figure stands at 85%.