Why AI Fears Are Suddenly Hitting Tech Stocks

Summary of Why AI Fears Are Suddenly Hitting Tech Stocks

by The Wall Street Journal

13m•February 4, 2026
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Overview of Why AI Fears Are Suddenly Hitting Tech Stocks

This episode of The Wall Street Journal's The Journal/What's News (Feb 4) explains a sudden sell-off in software and related stocks driven by rapid advances in AI models, and covers other market-moving stories: pressure on GLP-1 weight-loss drug makers, a crypto slump that threatens leveraged crypto plays, China’s ban on retractable EV door handles for safety reasons, and President Trump’s comments on federalizing elections and a diplomatic reset with Colombia.

Key takeaways

  • New AI model releases (from Anthropic and OpenAI) demonstrated capabilities that led investors to question the competitive moats of many software companies, wiping roughly $300 billion off firms tied to software.
  • Large software names hit include Adobe, Salesforce, LegalZoom, PayPal, Expedia, and Equifax; alternative-asset firms with big software exposure (KKR, Blue Owl, Blackstone) also fell.
  • Microsoft shares fell (~3%) amid concerns Copilot subscriptions may be underused; Recon Analytics and Citi data show migration gains for Google’s Gemini and low seat utilization of Copilot in some corporate accounts.
  • Bitcoin is down ~40% since its October high, weighing on platforms (Coinbase, Robinhood) and leveraged crypto holders such as MicroStrategy; sustained price weakness could force sales by firms that used equity to buy Bitcoin.
  • Novo Nordisk cut its sales outlook after unprecedented price competition in the GLP-1 market (Eli Lilly’s competition and pricing deals), forecasting material sales declines despite strong demand; list prices for oral GLP-1s are being offered around $149/month vs. roughly $1,000/month for injectables earlier.
  • China will ban retractable (flush) door handles on new cars starting next year, citing safety incidents; the move underscores China’s growing regulatory influence over EV design and safety standards.
  • Political notes: President Trump suggested federal intervention in state-run elections (drawing bipartisan opposition) and held a productive meeting with Colombian President Gustavo Petro, signaling a diplomatic reset.

Topics discussed (by section)

Software and AI

  • Trigger: recent Anthropic/OpenAI model updates showed broad non-engineer “vibe coding” and automation capabilities (e.g., legal drafting, research), threatening niche software vendors.
  • Investor reaction: panic-like selling across software equities and funds with heavy software exposure.
  • Defenses: software firms argue value lies beyond raw code generation—data management, security, customer trust—especially for sensitive enterprise uses.

Big Tech / Hyperscalers

  • Microsoft Copilot adoption concerns: some firms use very few paid seats; Google’s Gemini is gaining share.
  • Implication: even major vendors integrated with AI growth narratives can face churn if enterprise customers reduce seat usage.

Crypto

  • Bitcoin decline has a feedback loop risk: firms that hold large mined/treasury Bitcoin (MicroStrategy) act as leveraged bets; share declines or financial stress could force liquidations and push prices lower.

Pharmaceuticals (GLP-1 weight-loss drugs)

  • Novo Nordisk warns of sales declines due to pricing concessions and competition from Eli Lilly.
  • Market shift: rapid mass-market rollout and price competition (including plans for cheaper oral versions) create a different pricing dynamic than traditional pharma blockbusters.
  • Near-term: volume growth must be very high to offset price declines; investors will watch product launches (including oral GLP-1s) and upcoming Eli Lilly earnings.

Auto regulation (China)

  • New rule: cars sold in China from next year must have both internal and external mechanically operable door handles (no more purely retractable handles).
  • Rationale: safety incidents, including fatal cases where flush handles prevented escape or rescue.
  • Broader effect: China’s large EV market could influence global car design and safety standards.

Politics / Diplomacy

  • Trump suggested nationalizing elections in states alleged to be mismanaged — criticized by leaders across the aisle.
  • Trump met with Colombia’s president Gustavo Petro; meeting marked a thaw after months of tensions.

Notable quotes / soundbites

  • “New AI tools shave more than $300 billion off of companies that sell or invest in software.” (summary line)
  • “If a state can't run an election, I think the people behind me should do something about it.” — President Trump, on federalizing elections (controversial; met bipartisan opposition).
  • On MicroStrategy’s Bitcoin exposure: the company functions as a leveraged bet on Bitcoin—if its shares fall and it needs liquidity, it may sell crypto and exacerbate price declines.

Market impacts and implications to watch

  • Short term: continued volatility across software names and funds with concentrated software holdings; watch further AI product announcements and enterprise adoption metrics.
  • Hyperscalers: monitor Copilot and Gemini usage stats, enterprise seat utilization, and next-quarter guidance.
  • Crypto: monitor Bitcoin price, MicroStrategy’s share price/financial health, and possible forced liquidations from leveraged crypto holders.
  • Pharma: track Novo Nordisk’s volume trends, sales guidance updates, and Eli Lilly earnings; watch rollouts and pricing of oral GLP-1 therapies.
  • Auto design/regulation: follow whether manufacturers change door-handle designs globally and whether other regulators (EU, US) adopt similar safety rules.

Accuracy / transcript corrections

  • Corrected company names and common market references where the transcript had errors: MicroStrategy (not “Strategy”); Novo Nordisk’s marketed injection is Wegovy (transcript variations occurred). I preserved the substance but normalized known proper nouns.

Bottom line

Rapid AI capability gains have injected fresh doubts into the software sector’s defensibility, triggering broad sell-offs that ripple into investment firms and big tech. Meanwhile, structural shifts are reshaping other markets: intense price competition in weight-loss drugs is compressing revenues even amid huge demand; crypto declines amplify risks for leveraged corporate holders; and China’s new EV safety regulation may influence global car designs. Investors should watch adoption metrics, company guidance, and regulatory actions for signs of stabilization or deeper disruption.