Trillion-dollar AI market wipeout happened because investors banked that ‘almost every tech company would come out a winner’

Investors wobbled last week as they worked through the disruption AI is likely to cause across global industries, with further hiccups potentially bubbling through this week. But the reckoning should have been expected, argued Deutsche Bank in a note to clients this morning, because it is a readjustment of perhaps overly optimistic expectations.

Software stocks in particular suffered a wipeout amid mounting concerns that large language models may replace current service offerings. Companies in the legal...