When artificial intelligence (AI) company Anthropic released a new set of business-focused tools for its Claude large language model (LLM), you might have thought it would not have much of an impact on the stock market. After all, Anthropic isn't publicly traded (yet), and companies like Microsoft (MSFT 0.36%) have been releasing business-focused AI tools for years.
But Claude Cowork -- and, specifically, its set of plugins geared toward specific industries, like legal, finance, and sales -- sent the market into a tailspin, taking a number of software companies and Anthropic's AI rivals along for the ride.
For one notable AI stock, however, the market may have been too quick to judge, and some well-connected investors are taking advantage right now. Here's what they're buying and why.
Image source: Getty Images.
Why Alphabet got slammed
Most of the companies that got pulled downward in the wake of the Claude Cowork rollout were companies offering business-focused software-as-a-service (SaaS) platforms, like Salesforce, Intuit, and Atlassian (the stocks of which are down 27.9%, 33%, and 41.6% year-to-date, respectively, as I write this). Anxious investors worried that these companies' business customers would stop spending money on their expensive SaaS platforms if an AI tool could just handle the tasks those platforms are meant to streamline.
But another company pulled down by the sell-off was Google parent company Alphabet (GOOGL 1.35%) (GOOG 1.43%). Its shares dropped more than 6% in the week following the announcement. Of course, that's nothing compared to, say, legal database provider Thomson Reuters' 19.3% sell-off, but it's still significant for a company that doesn't provide the kind of industry-specific software packages on which Claude Cowork is expected to have an impact.
NASDAQ: GOOGL
Key Data Points
However, Google does have a huge presence in the AI race along with its own LLM, Gemini. In November, Google rolled out its own LLM update called Gemini 3, which was a big step forward in Google's AI offerings and edged out OpenAI's ChatGPT by some intelligence metrics. The rollout included agentic AI capabilities and an updated version of the popular Nano Banana image generator. Gemini 3 saw a huge uptick in paid subscribers, many of whom likely defected from ChatGPT. Investors are clearly concerned that Claude may now poach those same subscribers from Google.
Image source: Getty Images.
Don't panic
Legendary investor Warren Buffett counseled investors to "be fearful when others are greedy, and greedy when others are fearful." Buffett's Berkshire Hathaway recently took a position in Alphabet for the first time. Other famous investors seem to be heeding his advice and buying Alphabet on the dip.
Billionaire investor Cathie Wood jumped in with both feet on Feb. 5, buying a combined $21.6 million in Alphabet shares for three of her Ark Invest funds, including a brand-new $1.8 million position for the ARK Space & Defense Innovation ETF (ARKX 0.85%) and a $15 million position for the flagship ARK Innovation ETF (ARKK 2.63%).
Smart investors may want to follow these famous investors and take this opportunity to pick up shares of Alphabet at a discount.
