The Day the Machines Scared the Bankers
I’ve spent a lot of time watching the market obsess over which chipmaker is winning the AI arms race, but Tuesday marked a distinct shift in the narrative.
We are no longer just talking about who builds the AI; we are talking about whose job the AI is going to take.
The spotlight landed squarely on the financial sector after Altruist (Private Company), a fintech firm, unveiled "Hazel", an AI tool capable of crafting personalized tax strategies without manual input.
The reaction was swift and, in my view, perhaps a bit reactionary, but the numbers don't lie.
Traditional heavyweights like Charles Schwab (SCHW | -7.42%), Raymond James (RJF | -8.75%), and LPL Financial (LPLA | -8.31%) were hammered as investors questioned the long-term viability of human-led wealth management.
Even the big banks weren't safe; Morgan Stanley (MS | -2.45%), Wells Fargo (WFC | -2.85%), and Bank of America (BAC | -1.81%) saw significant retreats.
It seems the "AI premium" we’ve seen in tech is becoming an "AI penalty" for those seen as ripe for disruption. *Calculated based on "2 percent or meer" in source.
A Reality Check for the American Consumer
While the Dow Jones (DJI | +0.10%) eked out a record close, the underlying economic data was far from celebratory.
I took a close look at the retail sales report, and the story it tells is one of a consumer starting to hit the brakes. December sales were flat compared to November, missing the 0.4% growth economists were looking for. When you look at the 2.4% year-over-year growth against an inflation rate of 2.7%, it's clear that real spending power is eroding.
Vail Hartman from BMO Capital Markets put it perfectly: this isn't a disaster yet, but it’s certainly not "constructive". There is a silver lining for some, though; the weak data has pushed many in the pits to bet more heavily on a Fed rate cut, which is likely what kept the Dow in the green while the Nasdaq and S&P 500 slipped.
Ford’s Multi-Billion Dollar Battery Hangover
If you want to see what a strategic pivot looks like in real-time, look no further than Ford (F | -0.15%).
The company confessed to a staggering $8.2 billion net loss for 2025, largely driven by a $19.5 billion write-down on its electrification ambitions. I find it incredible that Ford was losing roughly $27,000 on every single electric vehicle it sold last year.
CEO Jim Farley isn't pulling punches, admitting the strategy for the electric F-150 Lightning was a "commercial flop" because the core customer base simply didn't want it. Now, Ford is pivoting back to internal combustion and hybrids, essentially aligning itself with the current administration's rollback of EV subsidies.
It’s a pragmatic move, but with the company also bracing for a $2 billion hit from tariffs, the road ahead for Detroit’s finest remains incredibly bumpy.
Bright Spots and Bubbling Concerns
Spotify (SPOT | +14.75%) proved that aggressive cost-cutting and a record user base can still win over the Street, delivering a profit forecast that sent the stock soaring.
We also saw some resilience in the industrial and semiconductor space, with DuPont (DD | +4.95%) hitting its 2025 targets and TSMC (TSM | +1.83%) reporting a massive 37% year-over-year revenue jump for January.
However, I can't ignore the pain at S&P Global (SPGI | -9.71%). Between a slight earnings miss and the same AI-related fears dogging the banks, the stock has now lost about a fifth of its value since the start of the year.
Even the "recession-proof" Coca-Cola (KO | -1.49%) felt the pinch, reporting slower-than-expected growth and a nearly billion-dollar write-down on its BodyArmor acquisition.
Conclusion
Today's sell-off in financials suggests that the safety net of the service sector is fraying. For investors, the takeaway is clear: watch your exposure to companies whose primary value is manual data processing or "standard" advice. The machines aren't just coming; they've started reporting for work.
To help visualize the dramatic shift in the financial sector today, I have created an infographic that highlights the key losers in the wake of the AI tax tool announcement.
Kristoff - ChartMill
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