A new wave of panic has swept through the market, driven by developments in artificial intelligence. Anthropic has introduced a new security tool named Claude, leading to a sharp sell-off in cybersecurity stocks.
Overnight in the U.S. stock market, shares of cybersecurity software companies experienced a collective downturn. Crowdstrike Holdings was among the hardest hit, falling approximately 8%, while Cloudflare dropped about 8.1%. At the same time, Zscaler declined around 5.5%, SailPoint fell roughly 9.4%, and Okta decreased about 9.2%. The Global X Cybersecurity ETF fell approximately 4.9%, closing at its lowest level since November 2023.
The trigger for this movement was AI company Anthropic PBC introducing a new security feature within its Claude AI model.
Anthropic stated that this new tool can "scan codebases for security vulnerabilities and suggest targeted software patches for human review." The company clarified that this update is currently only available in a limited research preview stage.
The decline in cybersecurity stocks is the latest example of the software sector weakening due to concerns about competition from AI-native companies. This anxiety has persisted for several weeks. The iShares Expanded Tech-Software Sector ETF has fallen over 23% this year and is on track for its largest quarterly decline since the 2008 financial crisis.
The launch of AI-assisted coding tools has intensified investor worries about traditional IT and cybersecurity firms. Analysts warn that automated AI solutions could disrupt existing software business models, compress profit margins, and force companies to innovate rapidly. The market is closely watching how AI will reshape the cybersecurity landscape.
Analysts commented, "The software sector has been facing persistent selling pressure, and the security segment experienced a mini 'flash crash' due to a single headline. This market is frightening for investors because even a hint of disruption can lead to relentless stock price declines. Maintaining caution is rational, as not long ago some argued software stocks were oversold, yet they continue to fall."
A significant portion of the sell-off stems from new AI tools released by companies like Anthropic, OpenAI, and Google. Investors are concerned about "vibe coding"—the ability to use AI to write software code—which could allow users to create their own applications. This potential shift may reduce demand for traditional products, putting pressure on company growth, profit margins, and pricing power.