Are AI Fears Triggering a Stock Market Doom Loop?
Watch on YouTube ↗  |  February 17, 2026 at 22:24 UTC  |  4:47  |  Bloomberg Markets
Speakers
Narrator — Financial Reporter

Summary

  • Wall Street's narrative has shifted dramatically: The fear is no longer that "AI is a bubble," but rather that "AI is an extinction event" for non-tech industries.
  • A "Doom Loop" dynamic is emerging where capital flees sectors perceived as vulnerable to AI disruption (SaaS, Finance, Legal, Gaming) and crowds into "AI Winners" (Infrastructure/Model Builders).
  • Specific catalysts are now triggering immediate selloffs: The release of an Anthropic plugin or a Google Gemini update is causing tangible drops in wealth management and video game stocks, respectively.
  • The market is bifurcating into two baskets: "AI Risks" (Legacy incumbents in services) vs. "AI Winners" (Tech infrastructure), with high correlation within these baskets.
Trade Ideas
Ticker Direction Speaker Thesis Time
SHORT Narrator The narrator explicitly states, "Look at the stock slides of companies like Salesforce, Charles Schwab and Blue Owl. Investors are concerned that AI might be able to replicate their offerings soon." This is the "Obsolescence Discount." As AI agents (like the Altruist tool mentioned) automate complex tasks like tax strategy and customer relationship management, the moats of legacy "System of Record" companies and human-heavy wealth managers evaporate. The market is repricing these firms from "growth compounders" to "distressed assets." SHORT. The narrative has turned; every new AI capability release will act as a negative catalyst for these stocks. AI integration by these incumbents could prove successful, proving they can adapt rather than die. 1:29
U /RBLX /TTWO
SHORT Narrator "We've seen video game stocks get hit after a new Google Gemini launched." Generative AI reduces the barrier to entry for game creation (coding, art assets) to near zero. If consumers can generate their own experiences or if small teams can build AAA-quality games using AI, the valuation premium for large gaming studios and engine providers (Unity/Roblox) collapses due to hyper-competition and margin compression. SHORT. The market views GenAI as deflationary for gaming IP value. These companies may integrate AI tools to lower their own production costs, boosting margins.
WATCH Narrator "Real estate stocks are selling off as investors think that this could be the next place that's going to get hit." Second-order effect of AI efficiency. If AI renders "countless businesses obsolete" or drastically reduces headcount needs in legal/finance/admin, the demand for commercial office space plummets further. Additionally, AI in property management could disrupt service margins. WATCH (Negative Bias). Sentiment is shifting against physical asset classes tied to white-collar labor. Interest rate cuts could buoy the sector regardless of the AI narrative. 3:14
LONG Narrator "Investors [are] looking instead to go more into the AI winners... You can see there's been a massive divergence as investors look to avoid companies associated with these risks and flock towards the AI winners." This is a capital rotation trade. Money leaving the "Disrupted" sectors (Finance, SaaS, Gaming) is not leaving the market entirely; it is recycling into the "Disruptors." As fear of obsolescence grows for the rest of the S&P 500, the premium on the few companies controlling the AI infrastructure increases. LONG. Momentum trade based on the "Safety Trade" dynamic within tech. Valuation overextension if AI monetization fails to materialize quickly.