There's an old market saying: "The market can stay irrational longer than you can stay solvent."
Keynes said that. But he might as well have been describing what happens every time financial markets stumble onto a new technology and decide to turn it into a straight-to-DVD horror movie.
AI is here. And with it came what the pros call the scare trade. The logic is simple and brutal: "Is AI going to destroy this sector? Dump everything now, ask questions later."
That's the market running on panic mode. Not analysis mode.
The Joker throwing cards in the dark
You know that scene where the Joker flings playing cards without aiming at anything? That's exactly what momentum algorithms and funds do when a fear narrative takes over the market.
Doesn't matter if Company X has rock-solid fundamentals, a fat cash balance, captive clients, and a ten-year competitive moat. If it operates in a sector that AI is supposedly going to obliterate, it's going to get smacked around right along with everyone else.
This isn't fundamental analysis. It's a herd in suits.
And which sectors are paying that price right now?
1. Healthcare and diagnostic imaging
Radiologists haven't slept well since AI tools started reading CT scans and MRIs with jaw-dropping accuracy. The market front-ran the apocalypse of medical specialists. Some diagnostic equipment and services companies watched their stocks crater.
The problem: AI still needs a doctor to validate, contextualize, and take legal responsibility. For now. But the market doesn't want to hear "for now." It wants to price in the worst-case scenario today.
2. Traditional education and online learning platforms
Test-prep companies, private colleges, and e-learning platforms all got walloped. The market's logic: "If ChatGPT teaches for free, who's going to pay for a teacher?"
An absurd oversimplification. But it worked well enough as a narrative to wipe out billions in market value within months. Duolingo, Chegg, publicly traded universities — they all found out what it feels like to become a side character in a script you didn't write.
3. Call centers and BPO (business process outsourcing)
This one has more substance. Companies that live off repetitive human interaction are genuinely threatened by conversational AI agents. The market didn't miss the target here — it just botched the timing and the magnitude.
The transition is real. But the market priced it like it was happening tomorrow morning. It's not. Regulation, legacy system integration, and plain old human resistance make this process slow, expensive, and full of stumbles. But the stocks already dropped as if the transition happened yesterday.
4. Mid-market digital advertising
Ad agencies and content creation tools got hit with a double whammy: AI writes copy, generates art, produces video. What's left for them?
Plenty, actually. Strategy, relationships, business intelligence, curation. But the market skipped that paragraph. It sold first.
5. Legal and legaltech
Legal research software, contract drafting, due diligence — all of it is being swallowed up by specialized LLMs. Companies like LexisNexis felt the heat. Legaltech startups watched their valuations collapse before a single real client actually canceled a subscription.
What would Taleb say about all of this?
Nassim Taleb has a concept that fits perfectly here: narrative fragility. When the market operates on story — not data — it creates systemic fragility. Everybody rushes for the same exit at the same time.
And who foots the bill? The retail investor who rode the narrative wave, bought in at the top when the sector was still "the future," and is now left holding the bag while the big funds have already repositioned for the next trade.
Skin in the game? The suit-and-tie analysts who said "dump everything in healthcare, AI is going to own diagnostics" — did they actually lose anything? Or did they just update the narrative in the next report?
The question nobody is asking
If the market is pricing in the simultaneous destruction of five sectors by AI — who's taking the other side of that trade?
The same funds dumping the "destroyed" sectors are buying Nvidia, Microsoft, Google, and OpenAI-adjacent plays. They don't actually believe in the apocalypse. They're using the apocalypse as a narrative to move prices.
Are you the horror movie character who walks into the dark basement — or are you the screenwriter who already knows how it ends?
Think about that before you make your next decision based on a headline.
