What’s the difference in Photoshop and AI photos?
There is a difference between altering a photo with editing software and an image being entirely generated by Artificial Intelligence.
- Names that once defined growth and innovation are under pressure as emerging AI platforms such as Anthropic’s Claude Cowork and Google’s Genie 3 threatened to cannibalize sectors they helped build.
- While tech sold off sharply, the Dow Jones Industrial Average notched fresh record highs Friday, with its limited tech exposure proving to be a key advantage.
Wall Street saw a dramatic rotation the week of Feb. 2, as investors fled once-reliable software stocks in the wake of mounting fears that generative artificial intelligence could permanently erode demand for traditional digital services.
Software stocks — tracked by the iShares Tech-Expanded Software Sector ETF — tumbled nearly 20% over the week, marking one of its worst weekly performances since the 2022 tech rout.
Names that once defined growth and innovation, like Microsoft, Salesforce and Adobe, are now under pressure, as emerging AI platforms such as Anthropic’s Claude Cowork and Google’s Genie 3 threatened to cannibalize the very sectors they helped build.
While tech sold off sharply, the Dow Jones Industrial Average notched fresh record highs Friday, Feb. 6, with its limited tech exposure proving to be a key advantage. The blue-chip index outperformed the Nasdaq 100 for seven consecutive sessions, its longest such stretch in nearly four years.
Despite Alphabet and Amazon delivering strong earnings, shares plummeted amid concerns that soaring AI infrastructure spending could shrink shareholder returns in the near term.
Bank of America’s Chief Investment Strategist Michael Hartnett said investors should go “Long Detroit, Short Davos,” favoring Main Street-focused cyclicals over Silicon Valley giants, suggesting a fundamental shift in market leadership.
The pivot away from tech was not just financial — it was also tied to labor concerns. According to Challenger, Gray & Christmas, U.S. employers announced 108,435 job cuts in January, up 205% from December. AI accounted for 7,624 of those, or 7%, the highest monthly share since tracking began in 2023. Nearly 80,000 layoffs have now been linked to AI since that time.
At the same time, consumers appeared less anxious about inflation. The University of Michigan’s February survey showed one-year inflation expectations fell to 3.5%, their lowest since January 2025, coinciding with President Donald Trump’s second inauguration.
In short, investors are questioning the once-unshakable dominance of software and tech. If AI is the disruptor, then value, cyclicals and tangible businesses may be the beneficiaries.
Benzinga is a financial news and data company headquartered in Detroit.
