Cyber security stocks fall on worries over Anthropic’s advanced AI tool

Information security and software stocks fell on Friday as traders fretted over Anthropic’s advanced AI model, in the latest slide sparked by worries new tools will upend a wide range of sectors. Concerns have mounted all week across the software industry after Anthropic announced that its latest AI model, Mythos, was able to detect critical vulnerabilities in code that extensive testing had previously missed. It was further evidence that AI models can often code better — and more quickly and at cheaper rates — than humans, a phenomenon which has ignited several bouts of selling this year. The S&P 500 software and services index fell 1.6 per cent on Friday, bringing its fall for this year to 26 per cent. A widely tracked Goldman Sachs basket of US software stocks dropped 5 per cent on Friday, also extending a sharp decline in recent months. Analysts said the market’s focus on developments in the Middle East had distracted investors from Anthropic’s potentially seismic new release, but that traders were now turning their attention again to these risks. “Anthropic’s new powerful Claude Mythos model has significantly escalated AI disruption fears,” said Mike O’Rourke at Jones Trading, a New York broker. In a sign of the magnitude of the concerns on Wall Street, Treasury secretary Scott Bessent and Federal Reserve chair Jay Powell earlier this week summoned some of the largest US banks to discuss the cyber risks Mythos posed. The selling on Friday hit information security groups particularly hard. Cybersecurity group CrowdStrike fell 4 per cent, Palo Alto Networks dropped 7 per cent and cloud monitoring group Datadog declined 3 per cent. Private credit groups that have backed software stocks also fell, with Ares down 4 per cent and Blackstone off 2 per cent. Anthropic this week announced the Claude Mythos Preview had been tested with a select group of customers, including Amazon, Apple, Microsoft, Broadcom, Cisco and CrowdStrike. In the past few weeks, it said the system identified thousands of previously undiscovered vulnerabilities and other security flaws, many of which were critical and have persisted for a decade or more. In one example, it found a 16-year-old flaw in widely used video software, in a line of code that automated testing tools had executed 5mn times without detecting the issue. This is the first model that Anthropic has chosen not to make generally available, the company said, because of the potential risks identified in testing.