AI-Driven Disintermediation Reshapes Four Industries—Is Now The Time To Buy?

The market’s enthusiasm around artificial intelligence has rapidly shifted from euphoria to fear, and that dramatic reversal is exposing a deeper structural threat: AI’s capacity to disintermediate entire industries. According to veteran investor Ed Yardeni, this shift from “AI-phoria to AI-phobia” is hammering four major sectors—Software, Brokers, Insurers, and Asset Managers—as investors grapple with a fundamental question: if AI can handle core business functions, do these intermediaries remain essential?

This isn’t simply a valuation reset. It’s a reckoning with disintermediation itself—the removal of middlemen between providers and end users. And for these four sectors, the implications are profound.

Software: When AI Becomes The Competitor

Software companies have experienced the steepest decline. The iShares Tech-Expanded Software Sector ETF (IGV) is down nearly 20% year-to-date, marking the worst performance across major industry groups. The driver is straightforward: generative AI tools like Anthropic’s Claude threaten to disintermediate traditional software providers by handling specialized tasks—legal analysis, financial modeling, sales optimization—that once required expensive enterprise applications.

The damage to data vendors has been particularly acute. Thomson Reuters Corp. shares have cratered 31.1% this year and fallen 57.6% from their summer peak. RELX plc, parent to LexisNexis, is off 30% year-to-date and 47.4% from May highs. FactSet Research Systems has slid 30% in 2026 and 57.3% from its December 2024 peak. S&P Global is down 25% this year and 30% from last August’s high.

The investor logic mirrors the dot-com era anxiety: if generative AI performs specialized workflows, do customers still justify paying for high-priced application layers? Forward price-to-earnings multiples have compressed sharply. Application Software now trades at 23.7x forward earnings—down from 35.3x at recent highs. Systems Software trades at 23.3x, down from 35.5x. The question haunting investors: are these valuations cheap, or cheap for a reason?

Financial Intermediaries Under Siege

Investment banks and brokerages face a parallel disruption. When fintech firm Altruist deployed AI tools capable of recommending personalized tax strategies, it crystallized investor fears: if AI can optimize taxation today, could it handle comprehensive financial advice tomorrow?

The pressure on brokers has been visible. Shares of Raymond James Financial sank 9% in a single session—the firm’s worst day since March 2020. Charles Schwab dropped 8% on the same day. The S&P Investment Banking & Brokerage index, tracked by the iShares U.S. Brokers-Dealers & Securities Exchanges ETF (IAI), remains only modestly positive year-to-date, but individual names have retreated 7% to 10% from recent highs.

What’s driving the selloff isn’t current earnings weakness—it’s structural. If AI reduces friction in financial advice, traditional advisory models face fundamental competition. The industry’s forward P/E has compressed from 24.7x to 15.9x. That’s not a temporary correction; it’s a reset reflecting long-term margin uncertainty.

Insurance Brokers Confront Direct AI Threat

Insurance brokers encountered their own reckoning when reports surfaced that AI-powered tools are being embedded directly into conversational platforms to generate personalized insurance quotes. The critical development: OpenAI approved an insurance application for ChatGPT, developed by Spanish digital insurer Tuio. That move perfectly crystallizes the disintermediation risk—underwriting, comparison, and quoting becoming seamless within AI interfaces, potentially removing the need for a broker intermediary.

The S&P Insurance Brokers index, closely tracked by the State Street SPDR S&P Insurance ETF (KIE), has fallen 4% year-to-date. Major players have retreated sharply from recent peaks. However, insurance remains stubbornly relationship-dependent and compliance-heavy—areas where incumbent brokers retain competitive advantages. Still, the core question persists: will AI meaningfully erode commissions, or will brokers successfully integrate AI into their own distribution channels?

Alternative Managers Hit Hardest By Spillover

Alternative asset managers may represent the most indirect—but potentially damaging—casualties of the AI selloff. The mechanism is subtle but serious: as public software valuations crater, the exit environment for private software investments deteriorates. Simultaneously, concerns rise about valuation marks on private equity and credit portfolios. Many alternative managers carry significant exposure to private software, either through direct equity stakes or private credit exposure.

The damage is visible. KKR Inc. shares have fallen 16% year-to-date. Apollo Global Management is down 11%. Blue Owl Capital has plummeted over 50% from record highs. Beyond AI concerns, Yardeni notes these firms also face investor worries about potential credit losses lurking in their diverse private loan portfolios.

The Valuation Question: Reset or Repricing?

The multiples have collapsed to extremes. According to Wall Street 2026 consensus forecasts, these industries maintain positive earnings growth projections:

• Financial Exchanges & Data: 7.6% projected growth, trading at 22.5x forward P/E
• Insurance Brokers: 12.2% projected growth, 15.9x forward P/E
• Investment Banking & Brokerage: 14.4% projected growth, 16.9x forward P/E
• Asset Management & Custody Banks: 15.4% projected growth, 15.5x forward P/E
• Application Software: 17.3% projected growth, 23.7x forward P/E
• Systems Software: 19.8% projected growth, 23.3x forward P/E

The compression is staggering. Many names have fallen from mid-30s multiples to low-20s, or from mid-20s to mid-teens. On paper, that suggests significant value. But the market isn’t simply debating valuation—it’s debating durability.

The Real Risk: Will Earnings Hold?

Yardeni frames the central tension: “Will AI competition trigger downward earnings revisions as contracts are renewed? That’s the risk.” The selloff isn’t about next quarter—it’s about whether these industries face structural margin compression over the next five to ten years.

For investors seeking to “buy the dip,” that distinction matters enormously. Yes, valuations have reached historically attractive levels relative to projected earnings. But if those earnings projections are too optimistic—if disintermediation accelerates and companies lose pricing power or market share—then current multiples could compress further, not expand.

The challenge for these four sectors is clear: adapt faster than AI evolves, or risk genuine structural decline. For value investors, the question is whether current prices already reflect that worst-case scenario, or whether significant downside remains.