Wall Street’s elite gathered in Palm Beach for The Wall Street Journal’s Invest Live event on Tuesday, only to witness a dramatic market reaction to AI startup Anthropic’s announcement of “Claude Cowork” legal plugins. The new AI tools, designed to automate contract triage and NDAs, sent shockwaves through financial markets, dragging down the Nasdaq and major tech stocks including Palantir and Oracle.
Thomson Reuters experienced one of its worst single-day drops, plummeting 20% by mid-afternoon as investors panicked that software investments considered cutting-edge just years ago could soon become obsolete. The selloff highlighted the market’s vulnerability to AI disruption and raised questions about which companies will survive the transformation.
Peter Orszag, CEO of Lazard and former Obama administration official, provided a sobering assessment: “The US economy and the equity market at this point are highly levered bets with regard to AI taking off.” He cautioned that while the technology itself will likely succeed, “the firms making the investments today are not necessarily the ones that benefit.”
Jon Gray, president of Blackstone (managing over $1.3 trillion), took a more optimistic view focused on AI infrastructure. “You don’t necessarily have to know who the winners and losers are going to be,” Gray explained. “You know that the data centers, the autonomous vehicles, the robots, they’re all going to plug into the wall, and there’s going to be a lot of need for digital infrastructure.”
Hemant Taneja, CEO of General Catalyst (a major Anthropic backer), acknowledged AI’s impact on employment, predicting that “every skill in any job can be better done by AI and robotics” within 20-30 years. He urged focus on education to retrain displaced workers.
Citi CFO Mark Mason, stepping down this spring, highlighted AI’s cost-saving potential for the bank’s operations. Meanwhile, activist investor Nelson Peltz brought levity to concerns about AI replacing legal work, joking “Not being a lawyer, I’m sort of happy” about faster legal answers. Steven Tananbaum of GoldenTree Asset Management saw opportunity in the “indiscriminate selling,” viewing the broad market reaction as a chance to find value.
Key Quotes
The US economy and the equity market at this point are highly levered bets with regard to AI taking off.
Peter Orszag, CEO of Lazard and former Obama administration official, explained the market’s vulnerability to AI uncertainty. His comment highlights how deeply financial markets have bet on AI success, making them susceptible to sharp reactions when that narrative is challenged.
You can bet on the technology paying off, but that the firms making the investments today are not necessarily the ones that benefit.
Orszag offered this sobering perspective on AI investment risk, suggesting that while AI technology will succeed, many current market leaders may not survive the transition—a warning particularly relevant given the day’s market selloff.
You don’t necessarily have to know who the winners and losers are going to be. You know that the data centers, the autonomous vehicles, the robots, they’re all going to plug into the wall, and there’s going to be a lot of need for digital infrastructure.
Jon Gray, president of Blackstone managing over $1.3 trillion, articulated an infrastructure-focused investment thesis that sidesteps the uncertainty of picking AI software winners by betting on the physical infrastructure all AI systems require.
Not being a lawyer, I’m sort of happy.
Billionaire activist investor Nelson Peltz joked about AI automating legal work, bringing levity to anxieties about professional displacement while acknowledging the technology’s potential to streamline complex processes.
Our Take
This event crystallizes a critical inflection point in AI’s market impact. Anthropic’s legal automation tools aren’t just products—they’re proof that AI can now directly replace high-value knowledge work, not just augment it. The market’s violent reaction reveals that investors have been operating on hope rather than clear understanding of competitive moats in the AI era.
What’s particularly striking is the divergence between infrastructure optimism and software pessimism. Blackstone’s Gray is right that infrastructure is a safer bet, but this creates a troubling dynamic: massive capital flowing into AI capabilities that will destroy value for existing software companies. The Thomson Reuters collapse is a canary in the coal mine for any company whose value proposition rests on human expertise that AI can replicate.
The most unsettling aspect is the timeline compression. Taneja’s 20-30 year prediction for comprehensive AI job displacement may prove conservative if legal automation is already market-ready today.
Why This Matters
This story reveals critical vulnerabilities in how financial markets are pricing AI disruption. The violent market reaction to a single product announcement from Anthropic demonstrates that trillions of dollars in market capitalization rest on uncertain assumptions about which companies will survive the AI transformation. The 20% single-day drop in Thomson Reuters—a legal and information services giant—signals that established software and services companies face existential threats from AI automation.
The divergent perspectives from Wall Street leaders highlight a fundamental tension: while AI infrastructure investments appear relatively safe, picking software winners is increasingly treacherous. Orszag’s warning that today’s investors may not be tomorrow’s beneficiaries echoes historical technology transitions where first movers often failed. The legal automation capabilities demonstrated by Anthropic represent just the beginning of AI’s disruption of knowledge work, with implications extending far beyond law firms to any industry relying on document processing, analysis, and routine decision-making. This event underscores that AI is no longer a future consideration but an immediate market force reshaping valuations and competitive dynamics across the economy.