For the past two years, artificial intelligence has been the story that drove stock markets higher. Companies with AI exposure soared. Valuations stretched. Investors piled in. Then, in early 2026, the mood shifted. AI stock impact Australia and globally is no longer a straightforward positive. It is becoming a source of genuine market anxiety.
   
Figure 1: AI-powered market analytics visualising the growing volatility and uncertainty surrounding AI-driven stock valuations. [Freepik]
The question investors are now asking is not whether AI will change the world. Most accept that it will. The question is whether the enormous spending on AI will ever translate into actual profits, and which industries might not survive the transition.
What Spooked Markets in Late February 2026?
The most recent wave of selling began after a widely shared research post by Citrini Research warned of an eventual stock market crash, a sharp pullback in consumer spending and widespread white-collar layoffs by 2028 as a result of AI advancement. The post described a world of reduced economic activity and structural unemployment, and it went viral over the weekend.
By Monday, the damage was visible across markets. Visa, Mastercard and IBM all fell sharply. The Dow Jones Industrial Average dropped more than 800 points. Five of the eleven S&P 500 sectors closed in the red, with financials down 3.3% and consumer discretionary down 2.2%. For investors tracking Australian stock market AI sentiment, the ripple effects were immediate and broadly felt.
IBM’s Worst Day Since the Dot-Com Era
One of the starkest moments in the sell-off involved IBM. The Company suffered its worst single-day drop since October 2000, the height of the dot-com bust. The trigger was an announcement from Anthropic that its Claude Code tool could now be used to update COBOL, a legacy computing language that underpins much of IBM’s maintenance and modernisation business.
Figure 2: IBM signage outside a corporate office. [Forbes]
Investors did not wait for confirmation. They sold. Accenture and Cognizant Technology, two other consulting and professional services companies, fell in tandem. The message from markets was pointed, AI investment risk Australia and globally is not just about which companies benefit from AI. It is increasingly about which companies may no longer be needed because of it.
Which Industries Are Under Pressure?
Investors are not selling everything. They are being selective. Mona Mahajan, head of investment strategy at Edward Jones, noted that investors have been quickly pulling money out of sectors viewed as vulnerable to AI disruption. Key sectors under pressure include:
- Financial services: payment companies, including Mastercard and American Express, fell sharply as traders contemplated a future with lower transaction volumes
- Software companies: AI-powered coding tools such as Claude Code and OpenAI’s Codex can now build complex software in minutes or days, raising questions about competitive moats
- Real estate and logistics: traditional barriers to entry in these sectors may be eroded by AI’s growing capabilities
- Consulting and professional services: IBM, Accenture and Cognizant all fell as markets priced in the risk of AI replacing high-value knowledge work
Figure 3: Mona Mahajan, head of investment strategy at Edward Jones, who warned investors are rotating out of sectors vulnerable to AI disruption. [Edward Jones]
Meanwhile, consumer staples, home to companies like Walmart and Coca-Cola, attracted inflows as investors rotated into businesses seen as less disrupted by AI.
The ASX in February 2026
Despite global uncertainty around AI stock impact Australia, the local market held up well through February. The S&P/ASX 200 rose 3.7% for the month, its strongest monthly gain since May 2025 and its third consecutive monthly rise. The index closed at 9,198.6, a record close, on 27 Feb 2026.
Communication services led sector gains, with REA Group climbing 3.6% to $166.39. Materials stocks surged after MP Materials signed a major rare earths supply contract. Lynas Rare Earths rallied 10.1% to $18.98, and Iluka Resources climbed 9.1% to $6.75. The standout mover was Block, which surged 27.8% to $94.15 after announcing it would cut 4,000 of its 10,000 staff while reporting gross profit rose 17% to US$10.36 billion for 2025.
The Companies That Fell on the ASX
Not every Company shared in the February rally. Several notable names fell sharply:
- Coles dropped 4% to $20.56 after reporting softer supermarket sales growth than rival Woolworths, particularly in liquor
- Bapcor slumped 3% to 87 cents after resuming trade following a heavily discounted capital raising at 60 cents per share
- Harvey Norman dropped 9% to $5.76 after first-half results showed weaker Australian sales
- TPG Telecom fell 7% to $3.94 despite returning to profit, reporting net profit of $52 million for the half
- Virgin Australia slipped 3% to $3.14 after statutory profit fell 27.9% to $341 million
Figure 4: Market risk visual highlighting investor concerns around AI investment risk and potential downside across equity markets. [Freepik]
For investors monitoring AI investment risk Australia, the broader takeaway is that even in a strong month for the index, individual stock risk remains elevated.
What Analysts Are Saying?
Analyst views on AI stock impact Australia and globally are divided. Some see the current anxiety as healthy and overdue. Others believe the existential concerns are being overstated.
Lori Calvasina, head of US equity strategy research at RBC Capital Markets, wrote in a note to clients that investors have been weighing concerns about cash flow, capital expenditure levels and industry survival in the AI era. She argued that existential concerns for industries outside software, such as wealth management and transportation, seem overblown.
Figure 5: Lori Calvasina, head of US equity strategy research at RBC Capital Markets, [LinkedIn]
Melissa Otto of S&P Global’s Visible Alpha research noted that Companies with complex workflows and proprietary data stand the best chance of withstanding AI disruption. She highlighted that unique, predictive data assets could give firms a genuine competitive edge. Franklin Templeton also flagged that the AI boom is driving valuations, but that risks are rising as spending accelerates without clear near-term profit visibility.
Industry Outlook
Precious metals investment Australia aside, the structural debate around AI and markets is only beginning. AI-powered coding tools from Anthropic and OpenAI have surged in capability since November 2025, compressing software development timelines dramatically. That pace of change is forcing investors to reassess competitive moats across an expanding range of industries.
For Australian stock market AI watchers, the local market’s resilience in February is encouraging. But global forces, including uncertainty around US Federal Reserve policy, geopolitical risks and the pace of AI capital expenditure, will continue to shape sentiment. The Companies best positioned will likely be those with proprietary data, differentiated workflows and the flexibility to adapt as AI integration deepens across the economy.
FAQ
Q1. What is driving AI stock impact Australia and globally?
Ans. Investor concerns centre on whether enormous AI spending will translate into actual profits, and which industries face permanent disruption from tools like Claude Code and OpenAI’s Codex.
Q2. Why did IBM fall so sharply in late February 2026?
Ans. IBM suffered its worst single-day drop since October 2000 after Anthropic announced its Claude Code tool could update COBOL, a legacy computing language central to IBM’s maintenance business.
Q3. How did the Australian stock market AI sentiment play out in February 2026?
Ans. Despite global volatility, the S&P/ASX 200 rose 3.7% for February, closing at a record 9,198.6 on 27 Feb 2026, its strongest monthly gain since May 2025.
Q4. Which sectors face the most AI investment risk Australia investors should watch?
Ans. Financial services, software, real estate, logistics and consulting are all under pressure as investors reassess competitive moats in an AI-driven environment.
