Markets (S&P 500) ended the week flat despite heightened volatility, while the Dow Jones Industrial Average closed above 50,000 for the first time. The tech-heavy NASDAQ fell 1.9% as investors fretted about the impact of new AI models on software companies. Other risker areas of the market also experienced selling pressure illustrated by Bitcoin which briefly fell to a 15-month low.
On Tuesday, generative AI company Anthropic released updates to its AI model Claude, designed to accomplish tasks in a variety of fields including sales, finance, legal, and customer support. The releases renewed fears that AI models may render certain types of software obsolete. While such fears seem premature, they highlight the uncertainty surrounding AI tools and their potential to disrupt different industries. Since peaking in late October, the S&P 500 Software index has fallen 28%, including another 8% decline this past week.
The selloff wasn’t contained just to companies potentially impacted by AI, but also those driving its development. Both Amazon and Google saw their shares decline after announcing plans to spend $200B and $180B, respectively, on AI infrastructure in 2026, renewing investor concerns about the returns on such large investments.
Through Friday, 59% of S&P 500 companies had reported 4Q25 earnings, with 76% of those companies beating their consensus estimate. According to industry group FactSet, consolidated earnings growth for 4Q25 is expected to be 13.0%, which if achieved, would mark the 5th consecutive quarter of double-digit earnings growth.
