Investors have spent the past three years getting excited about what AI can do; now that the technology is starting to live up to some of those predictions, they’re panicking. If their buy-in was indiscriminate, so is the sell-off. A rout that started in software has since caught up everyone from real estate brokers to package delivery groups.
When markets are near record highs, a new “tail risk” can weigh on share prices, even if the chances of a given business being wiped out are small. But there are ways to be scientific about all this. One lesson from previous bouts of tech disruption is to differentiate between threats to a company versus threats to its employees.
Take banking. Over the past decade, banking services for the average consumer have transformed from a branch-based model to something provided mainly through apps. That change has been difficult for tens of thousands of people — the UK’s four largest banks shed a combined 124,000 jobs between 2015 and 2024. But the companies themselves — meaning their shareholders — did fairly well. Lloyds, NatWest, Barclays and HSBC were all trading at post-financial crisis highs earlier this year.