Shares of Cushman & Wakefield (NYSE:CWK) plunged 14% on Wednesday as market participants sold positions in real estate services companies, joining a broader pullback that also hit Jones Lang LaSalle (NYSE:JLL) and CBRE Group (NYSE:CBRE), which fell 12% and 13%, respectively.
The selloff is being interpreted by analysts as a continuation of what has been termed the "AI scare trade" - a rotation out of firms perceived as vulnerable to automation. The phenomenon has recently affected stocks across software, insurance and financial sectors as investors reassess exposure to labor-intensive business models.
Market observers say the recent declines were initially linked to a negative reaction to strong jobs data and changing assumptions about the pace of Federal Reserve rate cuts. More recently, however, analysts have attributed the move primarily to concerns that artificial intelligence could reshape how professional services operate.
Investor note - Keefe, Bruyette & Woods analyst Jade Rahmani told clients that investors appear to be moving away from high-fee, labor-intensive companies that are seen as potentially susceptible to AI-driven disruption.
"We believe investors are rotating out of high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption," Rahmani wrote in a client note on Wednesday.
The same analyst cautioned that the market response could exaggerate the short-term threat to complex deal-making. In Rahmani's view, the selloff "may overstate the immediate risk to complex deal-making, even as the long-term AI impact remains a 'wait-and-see'."
Real estate services have now been added to a growing list of industries where investor anxiety has been heightened by new AI capabilities. The concern intensified after AI startup Anthropic released tools designed to automate work tasks across a variety of professional services, including legal work and financial research, prompting renewed scrutiny of firms whose business models rely on human expertise and fees tied to labor-intensive activity.
For now, market movements reflect investor sentiment around potential technological disruption rather than definitive evidence of immediate operational impact on deal-making or client services. Analysts and market participants appear to be weighing both the pace and the scope of AI adoption as they adjust portfolios.
Conclusion - The price action reflects investor caution about the vulnerability of fee-based, labor-heavy services to AI-driven automation, while some analysts warn the market may be overstating the near-term risk to complex transactions.