Schwab stock falls 6% as Meta's Muse stokes AI disruption fears

Key takeaways

• Charles Schwab shares fell 6% on Tuesday to their lowest since early July and are down more than 8% since Meta announced its Muse AI assistant, CNBC reports.
• Robinhood rose to another 52-week high on the same day.
• Options volume in Schwab ran about five times its daily average, with nearly twice as many puts bought as calls, per Cboe LiveVol data.
• Other brokerage and wealth stocks also slid, and the Financial Select Sector SPDR ETF lost 2%.

The news

Among Tuesday’s biggest losers was one of the oldest names in retail brokerage. CNBC reports that Meta’s latest consumer AI product has revived fears that artificial intelligence will eat into the fees that financial middlemen collect. Charles Schwab fell 6%, touching its lowest level since early July, and has lost more than 8% since Meta announced Muse.

Meta’s assistant says it will not trade for users or give financial advice, according to CNBC. When asked how it might do the work of an advisor or broker, it lists abilities such as tracking investments and progress toward goals and analyzing how holdings fit together.

Sector performance on Tuesday

The selling spread beyond Schwab, making this a sector story as much as a single-stock one.

Stock or fund	Tuesday move
LPL Financial Holdings	Down 7%
Charles Schwab	Down 6%
Raymond James Financial	Down 3.5%
Financial Select Sector SPDR ETF (XLF)	Down 2%
Interactive Brokers	Down 1%

XLF is now down 6% from highs set earlier in the month, and CNBC notes that higher interest rates may be adding to the pressure. It is the second time this year that an AI product has jostled the group. In February the same stocks fell when the platform Altruist said its Hazel tool could create tax-planning strategies for individuals and advisors. Schwab recovered some in the months afterward; LPL has not.

Robinhood went the other way. Its shares rose to another 52-week high, putting the stock up 10% for the year after a drop of more than 40% in the first quarter. In May the company launched AI agents that can trade and manage portfolios on behalf of users. CNBC reports Robinhood is up 1,200% over three years, against 83% for Schwab and 65% for XLF.

What advisors and analysts say

Jimmy Lee, founder and CEO of a Las Vegas-based wealth advisory firm overseeing $8 billion, told CNBC that advisors see Schwab as taking a wait-and-see posture while it works out how to defend market share. He does not think Meta competes much from the custodian side, unlike Altruist, but expects disruption among intermediaries that charge for billing, reporting and trading.

Schwab has its own AI efforts. Last week Schwab Advisor Services said it is working with Anthropic on a product called Claude for Financial Advisors, and in May Schwab launched an AI tool with tailored analysis from its research arm. A Piper Sandler analyst, Patrick Moley, wrote in April that AI and tokenization threaten the frictions that legacy intermediaries monetize and that Schwab’s reliance on low-yielding sweep cash puts it in the crosshairs. A Schwab spokesperson declined to comment, and Robinhood declined to add to the story.

Options flow

Options trading mirrored the split. In Schwab, volume was about five times its daily average and nearly twice as many puts were bought as calls. The most popular contract bought was the 90-strike put expiring in mid-January, a wager that the stock drops another 13% within three months, though CNBC notes one large sale of October 16 95-strike puts. In Robinhood, traders bought twice as many calls as puts, and more than 80% of $95 million in premium traded was tied to calls. The most active contract was the 125-strike call expiring Friday.

What to watch

Whether Schwab holds its early July low, further product launches from large technology platforms aimed at personal finance, and the direction of interest rates. This article reports market data and commentary and is not investment advice.