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Key Points
- AI disruption fears hit the financial sector this month following news of automated tax planning tools and mass unemployment scenarios.
- While the fears of AI disruption have merit, the selloff is likely overblown and more related to a rerating of overpriced stocks.
- Many of the stocks caught in the crossfire now look attractive on valuation grounds, which could be an opportunity for value-seeking investors.
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It feels like there’s a new artificial intelligence-related crisis happening every month. February was no different, as many financial firms announced new AI tax planning tools. That drop landed in an already jittery market: sector rotations have been picking up, and high-multiple stocks have been clobbered for even minor stumbles. However, this particular selloff appears overblown, and there may be an opportunity for investors to buy quality companies that have suddenly gone on sale.
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Why Financial Firms Sold Off—And Why It’s Overblown
Two shockwaves hit the financial sector in the last three weeks, causing some serious pain in the share prices of many large-cap companies. The first came from a fintech company called Altruist, which launched a tax planning tool in its AI platform called Hazel. Hazel can now automate many of the duties of a tax advisor, such as collecting and reviewing 1040s, 1099s, 1098s, and other IRS forms and financial statements. The platform uses this data to offer tax planning services for clients, transforming hours of tedious work into a few minutes of number crunching.
A second (and more speculative) panic hit the market towards the end of February when Citrini Research published a piece bombastically titled The 2028 Global Intelligence Crisis. The article detailed a mass displacement scenario for white-collar workers by 2028 that causes 10% unemployment and a 40% decline in the stock market. Despite a Preface acknowledging that the article details one hypothetical scenario and isn’t a prediction, the article served as the genesis of a nearly $300 billion equity wipeout, including a 20% two-day loss for International Business Machines Corp. (NYSE: IBM).
AI disruption is a very real concern, but these two events triggered massive stock declines, declines that look overblown. Many stocks that dropped suddenly won’t be seriously affected by the Hazel platform, and the scenario laid out in the Citrini report is merely the musings of one fund manager. Jittery markets often look for excuses to sell off, and these two events likely gave nervous investors a reason to hit the cash register. But great moments are born from great opportunity, and several financial firms are now looking enticing following the sudden downturn.
The following three stocks all took a hit during the selloff, but a deeper dive shows their underlying businesses remain strong in the face of AI disruption.
Charles Schwab: Core Businesses Unaffected By Tax Planning Software
Charles Schwab Corp (NYSE: SCHW) lost nearly 8% in a single day following the Hazel news, but the stock likely got caught in the crossfire of the broader sector decline since tax planning is a very small part of its business. A majority of the company’s revenue comes from asset management fees and interest income from client cash. Schwab reported record revenue in 2025, including 19% year-over-year (YOY) growth in Q4 2025. The company also projects 9.5% to 10.5% revenue growth in 2026, with net interest margin in a 2.85% to 2.95% range.
Schwab has a strong balance sheet, expanding margins, and a chart showing signs of a momentum reversal. The stock’s decline was halted near the 200-day simple moving average (SMA), and the Relative Strength Index (RSI) shows signs of weakening downward pressure. A surge back above the 200-day SMA would likely reignite the bullish momentum.
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S&P Global: Soft Guidance Could Be a Buying Opportunity
S&P Global Inc. (NYSE: SPGI) can’t entirely blame outside influence for its 20% decline over the last month. The company announced strong earnings and revenue during its Q4 2025 report on Feb. 10, and its AI initiatives continue to expand. However, the market wasn’t a fan of the light 2026 guidance, and the stock sold off 9% following the release. S&P Global faced a double whammy from the Hazel news and its own results, but it's unlikely that the company’s ratings assignments and fund offerings will be affected by these short-term concerns.
SPGI shares have been the hardest hit of the three stocks we’ll discuss here; all its gains over the last year have been erased in a few weeks. However, it also has the strongest underlying technicals pointing toward a quick reversal. The RSI is beginning to rebound following a plummet under the oversold threshold, and the Moving Average Convergence Divergence (MACD) indicator appears to be on the verge of a bullish cross. The stock gained more than 3.4% on Tuesday, its second-largest gain of the year, a sign that selling in SPGI shares might be fading.
Raymond James: AI Could Be a Tailwind for the Independent Advisor Model
Raymond James Financial (NYSE: RJF) dropped nearly 9% on the Hazel news, but again, this seems like a fundamental misunderstanding of the company’s business model. RJF’s independent advisors are likely to adopt AI tools like Hazel to expand client offerings, not lose business to them. The company is actively building its own proprietary AI platform called Rai, and the stock now trades at 13 times forward earnings and 1.9 times sales following the selloff.
RJF shares also took out the 50-day and 200-day SMAs during their drop this month, but the selling hasn’t been as furious as SPGI and SCHW, and the overall uptrend remains in place. The Golden Cross from last summer still has the 50-day and 200-day SMAs in a bullish position, and the RSI has trended back down to the lows it made in October and December. Despite the headlines, the stock is still not even in correction territory, and its last trip below the 200-day SMA was brief.
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