Anthropic Released a Legal Plugin and Wiped $285 Billion Off the Software Sector

Anthropic shipped 11 new Cowork plugins on Friday covering sales, finance, marketing, data analysis, and legal. One of those plugins, a legal automation tool that can review contracts, triage NDAs, run compliance checks, and draft templated responses, triggered the largest software selloff since the tariff shock in April.

Here's what happened. On Tuesday, a Goldman Sachs basket of US software stocks dropped 6% in a single session. An index of financial services firms fell almost 7%. The Nasdaq 100 fell as much as 2.4%. Bloomberg estimates $285 billion in market value erased in one day.

The selling hit hardest in companies that sell data and analytics to the legal industry. Britain's RELX, which owns LexisNexis, fell 14%. Wolters Kluwer dropped 13%. London Stock Exchange Group fell nearly 13%. Thomson Reuters fell roughly 16%. Snowflake, Atlassian, MongoDB, Elastic, and HubSpot each fell more than 10%. Salesforce, ServiceNow, and Workday each dropped over 7%. Many hit fresh 52-week lows.

On Wednesday, the selloff entered day two. The iShares Expanded Tech-Software ETF is now down about 28% from its recent high and roughly 17% year-to-date. Jefferies called software sentiment the "worst ever." Bloomberg Intelligence called it "radioactive." JPMorgan said the stocks are being "sentenced before trial."

Here's why this matters beyond the numbers. Anthropic's legal plugin is one of 11 open-source plugins published on GitHub. It automates contract review, NDA screening, and compliance workflows, work that law firms have billed at associate rates for decades. Harvey AI, one of the leading legal AI startups valued at $8 billion, is built on top of Anthropic's own models. So is Legora, valued at $1.8 billion. Both companies now face the question of what happens when the model provider starts shipping the same capabilities directly.

The broader fear is structural. Enterprise software companies built their businesses on seat-based subscriptions - you pay per user, per month, for access to a tool. If one AI agent can do the work of multiple seats, the math behind those subscription models breaks. That's not just a legal industry problem. Anthropic shipped plugins for sales, finance, marketing, customer support, and data analysis in the same release. Investors are starting to price in that logic across the entire sector.

Anthropic stressed that the legal tool is an assistant, not a replacement. All outputs should be reviewed by licensed attorneys. But the market doesn't care about disclaimers right now. It cares about the direction.

French prosecutors raided the Paris offices of X on Tuesday morning as part of a broadening criminal investigation. The raid was carried out by the Paris prosecutor's cybercrime unit in partnership with French police and Europol, the EU's law enforcement agency.

The investigation covers alleged complicity in possession and distribution of child sexual abuse images, creation of sexually explicit deepfakes, Holocaust denial, and manipulation of an automated data processing system. The investigation originally opened in January 2025 after a French lawmaker alleged that X's algorithms were distorting content distribution. It widened after Grok, xAI's chatbot integrated into X, generated posts denying the Holocaust and produced sexually explicit deepfake images without consent.

Prosecutors summoned Musk and former CEO Linda Yaccarino to appear at a hearing on April 20. Musk called it "a political attack." X's Global Government Affairs account called the raid "law enforcement theater designed to achieve illegitimate political objectives."

The Paris prosecutor's office announced it was leaving X, directing the public to find its updates on LinkedIn and Instagram.

This is happening on multiple fronts simultaneously. The UK's Information Commissioner's Office opened formal investigations into X and xAI on Tuesday over Grok's handling of personal data. The UK's media regulator Ofcom has a separate ongoing probe. The European Commission launched its own investigation last month. Malaysia and Indonesia have already blocked Grok entirely.

All of this came one day after SpaceX confirmed it acquired xAI for $250 billion, folding Grok, X, and Starlink under the same corporate umbrella. The regulatory exposure now sits inside a $1.25 trillion entity.

Palantir reported Q4 revenue of $1.41 billion, up 70% year over year. Adjusted EPS came in at $0.25 versus the $0.23 analysts expected. US revenue crossed $1 billion for the first time in a single quarter, with US commercial revenue up 137% and US government revenue up 66%.

CEO Alex Karp called it "indisputably the best results that I'm aware of in tech in the last decade."

The guidance is what stood out. Palantir projected 2026 revenue of roughly $7.19 billion, representing 61% growth. Wall Street was expecting $6.22 billion. That's a 15% beat on the guidance alone. The stock jumped 11%.

Palantir's AIP platform, which stands for Artificial Intelligence Platform, essentially a layer that lets enterprises deploy AI models within their existing workflows, continues to drive the acceleration. The company closed 61 deals worth more than $10 million in the quarter.

AMD reported Q4 revenue of $10.3 billion, a record, up 34% year over year. Non-GAAP EPS was $1.53 versus the $1.32 expected. Data center revenue hit $5.4 billion, up 39%, driven by EPYC processor demand and the continued ramp of Instinct AI GPU shipments.

Full year 2025 revenue was $34.6 billion, also a record.

The issue was Q1 guidance. AMD expects roughly $9.8 billion in Q1 revenue, above consensus of $9.38 billion, but below what some analysts were hoping for during an AI spending boom. The stock fell about 8% after hours.

There's also the China question. AMD shipped approximately $390 million worth of MI308 chips to China in Q4, which was not included in prior guidance. For Q1, they're forecasting only $100 million in China sales and aren't projecting any additional China revenue beyond that because, as CEO Lisa Su put it, "it's a very dynamic situation." They've submitted license applications for the MI325 but haven't received approval.

Nvidia's application to sell H200 chips to China is still waiting for final approval nearly two months after President Trump personally brokered the deal in December. Multiple government agencies, Commerce, State, Defense, and Energy, need to sign off. Commerce has finished its review, but the State Department is pushing for stricter conditions to prevent misuse.

Meanwhile, China hasn't formally approved the imports either. Beijing is concerned that buying the H200, which is one generation behind Nvidia's current Blackwell chips, could undermine its own push for semiconductor self-sufficiency.

Nvidia is caught between the two largest economies in the world, both using chip access as a strategic lever.

Wall Street expects Alphabet to report Q4 revenue of approximately $111.4 billion, up 15% year over year, with EPS of roughly $2.65. Google Cloud is expected to be the standout - analysts project 35%+ growth to about $16.2 billion.

The big question is capital spending. Alphabet previously guided 2025 capex between $91 billion and $93 billion. Investors want to know whether 2026 spending stabilizes or keeps climbing. After Microsoft lost $400 billion in market value last week partly over AI infrastructure spending concerns, Alphabet's guidance on this will set the tone.

Alphabet's stock is up roughly 25% since its last earnings report, where Google Cloud deals with Meta, Anthropic, and OpenAI drove optimism.

Two more partners have left or plan to leave Sequoia Capital. Josephine Chen, who focused on early-stage investments and joined nearly seven years ago, is leaving to start what she's described as a new fund concept. Cole Pergament, a growth team partner who joined from Mary Meeker's Bond last year, left late last month to start a company.

This follows Charlie Curnin's departure last month and Ravi Gupta stepping back from his general partner role in January to start his own company. That's four departures in recent weeks from a firm that typically has about 20 partners.

The pattern is consistent. AI is pulling talent out of established firms and into building. Curnin said he was leaving to take part in "a once-in-a-generation time to build transformational products." Sequoia has committed to invest in Gupta's new company.

Sequoia underwent a leadership transition in November when Roelof Botha passed the top role to Alfred Lin and Pat Grady after three years.

The Department of Justice and a group of US states appealed a federal judge's ruling on remedies in the Google search antitrust case. This came two weeks after Google also appealed.

Quick context: in 2024, a federal judge found that Google maintained an illegal monopoly in search through exclusive distribution contracts, meaning deals where Google paid companies like Apple to be the default search engine. The remedies ruling last fall rejected the most aggressive DOJ proposals, which included banning Google from paying for search distribution entirely and forcing the sale of Chrome. Instead, the judge prohibited exclusive deals and required limited data sharing with Google's competitors.

Both sides are now appealing. Google wants to block the data sharing and syndication remedies while the appeal plays out. The DOJ filed to oppose that. The judge hasn't ruled on the stay yet.

PayPal named HP CEO Enrique Lores as its next chief executive, replacing Alex Chriss, who joined from Intuit in mid-2023. The stock dropped more than 18%.

The numbers tell the story. Growth through PayPal-branded checkouts, meaning transactions where customers actually click the PayPal button at checkout, slowed to 1% in Q4, down from 6% in the same period a year earlier. Overall net revenue grew 4% to $8.7 billion, but much of that comes from behind-the-scenes payment processing, not the brand consumers see.

PayPal's challenge is that it's one checkout button among many. Even if a shopper has a PayPal account, they might use Apple Pay, Google Pay, or a stored card instead. The company has partnered with OpenAI and Google to enable payments inside AI chatbots, but said AI-powered transactions won't materially help growth in 2026 while the spending to build them will weigh on margins.

Walt Disney named parks chief Josh D'Amaro to succeed Bob Iger as CEO starting March 18. Dana Walden, who was seen as the other top contender, was named President and Chief Creative Officer. Iger will stay on as a senior advisor until he retires at the end of the year.

D'Amaro is the second parks executive in a row to get the top job. The last one was Bob Chapek, who took over in 2020 just as COVID shut down theme parks and froze production. After rising internal dissent and growing streaming losses, Chapek was forced out in late 2022 after two and a half years, bringing Iger back.