Good morning, investors. AI is, once again, rattling markets. There are two reasons it would be foolish to expect this to be the last time this happens:

That’s what we’re unpacking this morning.

There goes trucking

AI has become the new Grim Reaper for stock market sectors.

Over the last several weeks, it’s been knocking on doors of industries that thought they were AI-resistant and taking out billions in market valuation.

It nailed software stocks first, then financial services names.

On Thursday, AI came for freight brokers and logistics firms.

Shares of CH Robinson Worldwide and Landstar System each fell roughly 15%, and the Russell 3000 Trucking Index tumbled 7%.

The Dow Jones Transportation Average, meanwhile, dropped 4%.

The sell-off followed news that Algorhythm Holdings, a small AI-driven logistics firm, had developed a relatively cheap tool to help customers scale shipping and freight volumes by more than triple without any hiring increases.

Algorhythm stock finished the trading session 29% higher.

Just like the recent sell-offs in other sectors, investors made the knee-jerk reaction to dump exposed stocks and ask questions after the fact.

It’s clear the “AI fears” trade has moved well beyond tech. Disparate sectors are now succumbing to a familiar pattern:

Thursday made it clear that even the physical economy isn’t insulated.

To be sure, it's possible that AI may well reshape freight economics over time.

But that doesn’t necessarily justify this rapid of a re-pricing in the market.

As Opening Bell Daily covered earlier this week, the immediate market response to a new AI product is bound to be overdone.

Just as it’s difficult to conceive of a world without legacy software and financials, it seems too bearish to bet on a mass-extinction event for legacy trucking, logistics and freight.

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📊January CPI comes due today. The latest inflation report is expected to show a 2.5% gain from a year ago. That said, the print has consistently come in cooler than expected over the last year, and another light reading could give the Fed more confidence to cut rates. (CNBC)

📉 Real estate stocks also tumbled Thursday. Similar to the trucking sector, commercial real estate names fell on concerns regarding office space and AI disruption. (Bloomberg)

I sat down with Kai Wu of Sparkline Capital to unpack how investing in technology is shifting this year, the impact on stock returns, finding early adopters and why the Magnificent 7 are falling out of favor.

Tune in to Full Signal on YouTube, Spotify, or Apple Podcasts.

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