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Real estate services stocks sank Wednesday as investors assessed the companies’ vulnerability to the newest crop of artificial intelligence applications and tools that threatens to disrupt several industries.
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Shares of CBRE Group Inc. plunged as much as 15 per cent, Jones Lang LaSalle Inc. slid 13 per cent and Cushman & Wakefield Ltd. fell 15 per cent. For all three firms, the moves mark the biggest drop since March 2020 in the midst of the COVID-driven market selloff.
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“We believe investors are rotating out of high-fee, labour-intensive business models viewed as potentially vulnerable to AI-driven disruption,” Keefe, Bruyette & Woods analyst Jade Rahmani wrote in a note to clients on Wednesday.
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Still, the analyst also notes that the selloff “may overstate the immediate risk to complex deal-making, even as the long-term AI impact remains a ‘wait-and-see’.”
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The group is the latest to get caught up in what Rahmani calls the “AI scare trade,” after investors rushed to dump shares of software firms, private credit companies, wealth managers and insurance brokers within the span of just over a week.
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The fears came to the fore last week after AI startup Anthropic released tools aimed at automating work tasks in areas ranging from legal services to financial research. At the same time, analysts and investors have warned that some of this steep selling reflects a knee-jerk reaction and could be overestimating some of the risk.
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—With assistance from Arvelisse Bonilla Ramos.
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