The week that transformed everything through AI

AI Shakes Up the Business World

This week marked a turning point in the ongoing conversation about artificial intelligence transforming society. The impact of AI felt more immediate than ever, with major companies making drastic decisions and the financial markets reacting strongly.

Over several days, the stock market experienced significant drops, fueled by both optimism and anxiety about AI’s future. Contributing factors included Nvidia’s less-than-expected forecast and a widely circulated blog post that speculated about a future where AI renders many office jobs obsolete.

A Tumultuous Week in Tech and Finance

Anthropic, a leading AI company, introduced new features that could dramatically alter workplace productivity. However, the company soon found itself in a heated dispute with the Pentagon over ethical boundaries, risking its reputation in the process. At the same time, Anthropic relaxed some of its safety protocols as competition in the AI sector intensified.

Meanwhile, Block, the parent company of Square and Cash App, announced it would cut nearly half of its workforce—over 4,000 employees—citing AI advancements as the main reason. The CEO warned that similar actions by other companies may soon follow.

It was a week full of dramatic developments. Here’s a closer look at what happened.

Investor Anxiety Over AI

On Monday, the Dow Jones Industrial Average plunged more than 800 points, largely in response to a Substack article from Citrini Research. The post outlined possible ways AI could disrupt the economy, including the potential for AI agents to make many white-collar roles unnecessary. Although the article was clearly labeled as speculative fiction, it still rattled investors.

Shares of companies mentioned in the report, such as DoorDash and American Express, dropped sharply. Later in the week, tech stocks took another hit after Nvidia released its earnings. Despite the company nearly doubling its profits and achieving record sales, investors were unsettled by its cautious outlook, fueling concerns that the AI investment boom might not deliver the expected returns.

This week’s steep market declines highlighted just how sensitive investors are to both positive and negative news about AI—even when the scenarios are hypothetical.

Claude AI’s Rapid Evolution

Earlier this month, Anthropic intensified concerns about workplace disruption by updating its Claude Cowork agent, raising fears that it could replace numerous software tools. On Tuesday, the company rolled out another upgrade, enhancing Claude’s capabilities in areas like design, human resources, and wealth management, and enabling it to work within popular applications such as Microsoft Excel and PowerPoint.

Anthropic insists that its tools are meant to complement, not replace, existing jobs and software. Nevertheless, the pace of these updates has left investors reeling.

Anthropic’s Standoff with the Pentagon

Anthropic CEO Dario Amodei entered into a high-profile conflict with the Pentagon over the use of AI. The company established two firm boundaries: its Claude AI would not be used in autonomous weapons or for mass surveillance of Americans.

Despite these red lines, Defense Secretary Pete Hegseth invoked the Defense Production Act to demand access to Anthropic’s technology, threatening to cancel a $200 million contract and label the company a supply chain risk if it refused. President Trump escalated the situation by ordering federal agencies to phase out Anthropic’s products within six months, warning of severe consequences if the company did not comply.

Anthropic stood firm, publicly rejecting the Pentagon’s demands and stating that threats would not alter its ethical stance. In the midst of this standoff, Anthropic also eased some of its core safety policies to remain competitive in a rapidly evolving market.

Mass Layoffs at Block

Concerns that AI could lead to widespread job losses have been discussed for years, but those fears became reality when Block announced it would reduce its workforce by 40%. Co-founder Jack Dorsey attributed the decision to the adoption of advanced AI tools, predicting that many other companies would soon follow suit.

With more than 4,000 employees losing their jobs, Block’s move reignited debates about a potential wave of AI-driven layoffs. While some economists remain skeptical that such a scenario will happen on a large scale, Dorsey’s warning feels more plausible than ever.

Reporting contributed by John Towfighi, David Goldman, Hadas Gold, Ramishah Maruf, and Allison Morrow.