AI disruption dominates markets, as gold and silver continue to recover

European stocks are mixed on Wednesday. The FTSE 100 is rising, and the Eurostoxx 50 index is down a touch, gold and silver are higher for a second day, as European markets mostly shrug off a steep decline in US tech stocks on Tuesday. The sell off was spurred by news that Anthropic was releasing an AI tool so powerful that it threatens the business models of many global software providers.

Traditional software providers such as Salesforce, Microsoft, Oracle and SAP are the big losers in the AI race so far this year. SAP is down by a fifth since the start of this year, and Salesforce has fallen by 25%. Asian software providers such as Infosys and Tata are also following their US peers lower today, and Infosys stocks are lower by 7% so far today. Traditional software firms provide global corporates with programmes and data that tells computer hardware what to do and how to do it. Typically, these software programmes are expensive and cumbersome, requiring many resources to keep them updated and working effectively.

AI changing how corporates use tech

This has been the case for decades, and software companies have been the centre of the tech industry. However, AI is changing that. Anthropic, a private AI research company, released its Claude Cowork legal plugin this week, and the stock market shivered, with tech stocks particularly exposed. AI plugins are now the biggest threat to the software business model. They are cheaper and easier for companies to use, they require simple commands that anyone can input, and their output rivals any software provider.

Can AI bring down inflation?

Thus, we are entering the era where AI could upend the traditional tech ecosystem. This was not the case in recent years, where software providers could rally alongside AI developments, this is now not the case. We are in an era where AI can automate tasks in legal, sales, marketing and data analysis. This has big implications for the stock market and the overall economy.  AI is now targeting professional services. This will mean reduced demand for consulting, reduced headcount and more focus on higher level AI oversight. There will be a major boost to productivity in countries that adopt these tools fastest, and potentially a rise in job losses.

The impact on the stock market is already being felt, but there are other consequences. For example, if there are major productivity gains, then this could push inflation down, by reducing the cost of producing goods and services, which will impact central bank policy. If increased productivity weighs on wage growth in the coming months and years now that tools like Anthropic’s are being adopted, this could make it easier for central banks to cut interest rates.

Thus, it will be worth listening out for any commentary around this topic at tomorrow’s BOE and ECB meeting. There has been no change in rate cut expectations in recent days and bond yields are relatively stable. The question is, will they stay this way as AI makes its mark on the world?

Investors get choosy about their stock picks

We expect software stocks to remain under pressure in the near term; however, it is not all bad for the AI supply chain. Memory and chip makers will be necessary to power Anthropic’s latest tools and the others that come after it. The AI trade is not moving in unison in 2026, and idiosyncratic factors may continue to drive stocks in the short term. This could keep the Nasdaq under pressure as other value-orientated sectors of the market and small caps are favoured over tech giants. S&P 500 futures are mostly unchanged right now, as fears about tech disruption come up against a strong fundamental backdrop in the US and Europe.

Rather than trading in unison, traders are getting picky about which companies they want exposure to. Earnings will be important for the direction of individual names. AMD’s stock could come under pressure later today after it reported earnings and a future outlook that disappointed analysts. In Europe, Novo Nordisk’s shares are lower by 18%, after it warned that sales will decline between 5% and 13% this year, lower than analysts had expected. This has wiped out the stock’s YTD gains.

Gold and Silver reclaim milestones

In contrast, the rally in gold and silver in the last two sessions has seen gold reclaim the $5,000 handle, and silver is back above $90. The oil price is also up a notch as geopolitical tensions come back to haunt markets. In the current period of AI disruption, we expect hard, real assets like commodities to remain in demand, which may help gold and silver’s recoveries to extend.

Without US economic data, the market is sensitive to headlines. The focus will shift to earnings, including Alphabet. BOE and ECB central bank meetings on Thursday will also come into focus for rates and the FX market, as the pound and the euro continue to rally vs. the USD into these meetings.