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February 4, 2026

Good morning. Andrew here. We’ve written a lot about what happens if we’re in an A.I. bubble and it bursts. But what happens if it works?

There has long been a question mark about what happens to employment in an age of A.I. — now it appears the inflection point may have arrived sooner than some expected. That’s not to say that employment will fall off a cliff tomorrow. But the market typically projects economic results 12 to 18 months in advance. So watch this space. More below. (Was this newsletter forwarded to you? Sign up here.)

Investors are fleeing software stocks as A.I. companies like Anthropic introduce more-sophisticated business tools. Marissa Leshnov for The New York Times

A.I.’s latest blow to software stocks

Shares in software and analytics companies are down in Asia and Europe this morning, after a battering on Wall Street yesterday.

Fears that artificial intelligence will disrupt the industry appear to be growing, as investors reckon with the severity and breadth of that shake-up.

The latest: Software and services companies lost about $300 billion in market value yesterday after the release of more A.I.-driven automation tools by Anthropic, the maker of the Claude chatbot. The worry is that these tools, which can handle some legal, marketing and customer-service tasks, could replace many current offerings.

Shares in Thomson Reuters fell almost 16 percent and LegalZoom.com lost nearly 20 percent, while a JPMorgan index that tracks U.S. software stocks dropped 7 percent. The stock of Infosys, the big Indian I.T. outsourcing provider, is down 7 percent today as well.

How much disruption is coming? A.I. start-ups like the legal services providers Harvey and Legora have already put pressure on incumbents. But the entrance of model makers like Anthropic into these businesses — allowing companies to pare down their software subscriptions while programming their own processes — represents a bigger potential threat.

Even before Anthropic introduced its latest tools, shares in companies like Salesforce, HubSpot and Atlassian had fallen by 30 percent or more over the past year. Toby Ogg, an analyst at JPMorgan Chase, wrote in a recent client note that more than 50 investors in the U.S. and Europe told him during the past two weeks that they had been steadily reducing their exposure to software stocks.

The counterargument: “There’s this notion that the tool in the software industry is in decline, and will be replaced by A.I.,” Jensen Huang, the C.E.O. of Nvidia, said at an industry conference yesterday. “It is the most illogical thing in the world.”

Huang argued that A.I. companies won’t rebuild basic software tools from scratch, and that companies would continue to rely on existing offerings. “If you were a human or robot, artificial, general robotics, would you use tools or reinvent tools?” he said. “The answer, obviously, is to use tools.”

Walmart breaks the $1 trillion barrier. Shares in the retail giant rose 2.9 percent yesterday, making its market value greater than those of Costco, Home Depot and Target combined. It joins technology giants like Apple and Nvidia in a small club, having benefited from drawing in more higher-income consumers and posting rapid e-commerce growth.

Ken Griffin criticizes the Trump administration for interfering in business. The founder of Citadel, the big hedge fund, criticized the federal government at a Wall Street Journal conference for taking stakes in private companies. Griffin, one of few major Republican donors to be publicly critical of President Trump, also accused the administration of making “missteps” that were “very, very enriching” to the families of administration members.

Documents appear to reveal whom Jeffrey Epstein wanted to inherit his fortune. A document signed by the disgraced financier two days before his death by suicide names his girlfriend Karyna Shuliak as the inheritor of about $100 million of his once-vast fortune. It is unclear if Shuliak or any of the other 40 possible beneficiaries mentioned would receive any money, after his estate pays taxes, restitutions to victims and lawyers’ fees.

More pain for PayPal

PayPal needs a new turnaround plan — again. Shares of the digital payments giant plunged 20 percent yesterday after the company ousted its C.E.O., Alex Chriss, and lowered its profit expectations for the year.

PayPal was for years one of the biggest beneficiaries of the explosive growth in digital financial services. But more recently, the company has struggled amid stiff competition from Apple Pay, Google Pay, Zelle and Shopify.

Now PayPal is playing catch-up and may consider a major restructuring, Niko Gallogly reports.

PayPal is betting on a new leader. The company announced yesterday that Enrique Lores, the C.E.O. of HP, would replace Chriss. Lores, who has served on PayPal’s board for the past five years, starts in March.

A peak, then a fall: Under the leadership of another former C.E.O., Dan Schulman, PayPal’s stock rose to a high of $308 in 2021, driven by a pandemic-era e-commerce boom. Schulman roughly tripled PayPal’s revenue from 2015 to 2022 to $27.5 billion by focusing on growing business volume through PayPal’s checkout button.

In 2021, he attempted to build a “financial super app” that never took off. By the time Chriss replaced Schulman in 2023, PayPal’s stock had slumped to $58 per share.

A pricing pivot gone wrong: Under Chriss, PayPal raised prices for merchants in an effort to claw back margin. That “proved to be the wrong strategy,” Adam Frisch, an analyst at Evercore ISI told DealBook, because merchants de-emphasized PayPal’s checkout button as a result.

PayPal faces a Whac-a-Mole of other challenges, Dan Dolev, an analyst at Mizuho, told DealBook. Its software is clunkier than competitors’ and it has lagged on implementing biometric checkouts to speed up transactions.

It has also struggled to monetize its Venmo business, despite the payment app having more than 100 million users.

One option on the table: Sell off key assets. Lores helped manage the 2015 split of Hewlett-Packard into HP Inc. and Hewlett Packard Enterprise, becoming C.E.O. of HP Inc. in 2019.

His hiring signals PayPal is seriously “considering alternatives for some of their key assets,” such as Venmo, Frisch said.

The growing fight over Nvidia’s China chip sales

Nvidia’s stock price jumped nearly 2 percent last week after reports that Beijing had approved imports of Nvidia H200 artificial intelligence chips to Chinese customers. But that investor optimism proved short-lived.

Nvidia’s C.E.O., Jensen Huang, called the reports “fake news” and said that China had yet to grant licenses for chip imports. The delay, instead, is probably related to disagreements over provisions in U.S. export licenses, Grady McGregor reports.

At the same time, backlash is building in Washington over Nvidia’s China business, while Beijing appears ambivalent about whether it should accept the chips at all.

A recap: President Trump and Nvidia struck a deal in December to allow sales of the company’s H200 chips to Chinese companies, with the U.S. government taking a 25 percent cut.

The agreement angered China hawks in Congress, who warned that the powerful chips could help Beijing close its technological gap with the U.S. Nvidia and David Sacks, the White House A.I. czar, argue that the deal would make China more dependent on American technology.

Congress is pushing back. On Jan. 21, the House Foreign Affairs Committee voted nearly unanimously to advance the AI Overwatch Act to the House floor. The legislation would subject H200 shipments to congressional review and bar Nvidia from selling China the more-advanced Blackwell chips.

Right-wing influencers then accused House Republicans of undermining President Trump’s authority. Sacks endorsed one of those critiques, prompting a public exchange with Representative Brian Mast, the House Foreign Affairs Committee chair. “My job is not to be a yes-man to David Sacks or for Jensen Huang,” Mast told Axios.

Why it’s a wedge issue: Michael Sobolik, a senior fellow at the Hudson Institute, a conservative think tank, said House Republicans were willing to challenge the White House in this case because the bill combines two core priorities: China and A.I.

“When Nvidia makes the case that this is actually going to help national security, actual national security members on the Hill are like, that’s insane, you don’t equip your adversary,” he told DealBook.

Nvidia has previously disputed the idea that China’s military would use its chips. The delay in chip shipments is more likely to be related to a U.S. restriction that bars Chinese companies from using H200 chips outside China even if they are allowed to use them in China, DealBook hears.

Chart of the day: crypto crash

Bitcoin’s long, painful slide continues. The cryptocurrency briefly fell below $73,000 yesterday for the first time since 2024, before rallying later in the day. (It was trading around $76,000 this morning.) Since hitting a record high in early October, Bitcoin has slid nearly 40 percent, wiping out around $1 trillion in market value.

The prolonged sell-off comes even as the S&P 500 continues to flirt with new highs.

Bedrock Robotics says its products could eventually allow contractors to work on projects as long as 24 hours a day. Bedrock Robotics

An A.I. start-up for construction raises a big new round

Mention autonomous vehicles, and most people tend to think of robotaxi operators like Waymo. But a year-old start-up, Bedrock Robotics, is aiming to change that — and has collected a lot of money to help with that goal.

Bedrock plans to announce today that it has raised $270 million at a $1.75 billion valuation, Michael de la Merced is first to report.

Bedrock focuses on big construction vehicles. Its sensors and software use technology similar to that employed by Waymo, like lidar, to let the machines operate autonomously.

The product can be added to existing equipment from major manufacturers including Caterpillar, John Deere and Komatsu.

Bedrock says its technology augments, not replaces, human labor. Sofman points to ongoing labor shortages in the construction industry — one trade group says the sector in the U.S. needs 349,000 new workers this year to meet demand — as a reason to adopt its product.

So far, some early users say Bedrock’s product shows promise. “We’re three to five years ahead of where I would have expected to be when we first met these guys,” Trey Taparauskas, the C.E.O. of Champion Site Prep, a contractor in the Austin, Texas, area, told DealBook.

Boris Sofman, Bedrock’s co-founder and C.E.O., told DealBook that the start-up’s products could eventually enable contractors to let their machines run 24 hours a day, allowing them to finish more jobs more quickly. That could help build more housing and data centers in particular, areas of interest to the Trump administration.

That potential was what underpinned the new fund-raising round, led by CapitalG, an investment firm owned by Alphabet (which also owns Waymo), and the Valor Atreides AI Fund. Other investors included the existing backer 8VC and the venture capital arm of Nvidia.

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