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Billions Wiped Out as Software Stocks Sink on AI Disruption Fear

Growing worries that artificial intelligence tools could soon disrupt the world’s biggest software businesses are sparking a selloff across the sector.
A 30% plunge in Monday.com Ltd. shares grabbed investor attention in Europe on Tuesday, with some analysts saying the drop reflected concerns over the long-term competitive threat of AI as much as results that failed to meet higher investor expectations.
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Hackers exploit hidden prompts in AI images, researchers warn

Cybersecurity firm Trail of Bits has revealed a technique that embeds malicious prompts into images processed by large language models (LLMs). The method exploits how AI platforms compress and downscale images for efficiency. While the original files appear harmless, the resizing process introduces visual artifacts that expose concealed instructions, which the model interprets as legitimate user input.
In tests, the researchers demonstrated that such manipulated images could direct AI systems to perform unauthorized actions. One example showed Google Calendar data being siphoned to an external email address without the user’s knowledge. Platforms affected in the trials included Google’s Gemini CLI, Vertex AI Studio, Google Assistant on Android, and Gemini’s web interface.
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The approach builds on earlier academic work from TU Braunschweig in Germany, which identified image scaling as a potential attack surface in machine learning. Trail of Bits expanded on this research, creating “Anamorpher,” an open-source tool that generates malicious images using interpolation techniques such as nearest neighbor, bilinear, and bicubic resampling.
From the user’s perspective, nothing unusual occurs when such an image is uploaded. Yet behind the scenes, the AI system executes hidden commands alongside normal prompts, raising serious concerns about data security and identity theft. Because multimodal models often integrate with calendars, messaging, and workflow tools, the risks extend into sensitive personal and professional domains.
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Traditional defenses such as firewalls cannot easily detect this type of manipulation. The researchers recommend a combination of layered security, previewing downscaled images, restricting input dimensions, and requiring explicit confirmation for sensitive operations.
“The strongest defense is to implement secure design patterns and systematic safeguards that limit prompt injection, including multimodal attacks,” the Trail of Bits team concluded.
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When AI Freezes Over | Psychology Today

A phrase I’ve often clung to regarding artificial intelligence is one that is also cloaked in a bit of techno-mystery. And I bet you’ve heard it as part of the lexicon of technology and imagination: “emergent abilities.” It’s common to hear that large language models (LLMs) have these curious “emergent” behaviors that are often coupled with linguistic partners like scaling and complexity. And yes, I’m guilty too.
In AI research, this phrase first took off after a 2022 paper that described how abilities seem to appear suddenly as models scale and tasks that a small model fails at completely, a larger model suddenly handles with ease. One day a model can’t solve math problems, the next day it can. It’s an irresistible story as machines have their own little Archimedean “eureka!” moments. It’s almost as if “intelligence” has suddenly switched on.
But I’m not buying into the sensation, at least not yet. A newer 2025 study suggests we should be more careful. Instead of magical leaps, what we’re seeing looks a lot more like the physics of phase changes.
Ice, Water, and Math
Think about water. At one temperature it’s liquid, at another it’s ice. The molecules don’t become something new—they’re always two hydrogens and an oxygen—but the way they organize shifts dramatically. At the freezing point, hydrogen bonds “loosely set” into a lattice, driven by those fleeting electrical charges on the hydrogen atoms. The result is ice, the same ingredients reorganized into a solid that’s curiously less dense than liquid water. And, yes, there’s even a touch of magic in the science as ice floats. But that magic melts when you learn about Van der Waals forces.
The same kind of shift shows up in LLMs and is often mislabeled as “emergence.” In small models, the easiest strategy is positional, where computation leans on word order and simple statistical shortcuts. It’s an easy trick that works just enough to reduce error. But scale things up by using more parameters and data, and the system reorganizes. The 2025 study by Cui shows that, at a critical threshold, the model shifts into semantic mode and relies on the geometry of meaning in its high-dimensional vector space. It isn’t magic, it’s optimization. Just as water molecules align into a lattice, the model settles into a more stable solution in its mathematical landscape.
The Mirage of “Emergence”
That 2022 paper called these shifts emergent abilities. And yes, tasks like arithmetic or multi-step reasoning can look as though they “switch on.” But the model hasn’t suddenly “understood” arithmetic. What’s happening is that semantic generalization finally outperforms positional shortcuts once scale crosses a threshold. Yes, it’s a mouthful. But happening here is the computational process that is shifting from a simple “word position” in a prompt (like, the cat in the _____) to a complex, hyperdimensional matrix where semantic associations across thousands of dimensions create amazing strength to the computation.
And those sudden jumps? They’re often illusions. On simple pass/fail tests, a model can look stuck at zero until it finally tips over the line and then it seems to leap forward. In reality, it was improving step by step all along. The so-called “light-bulb moment” is really just a quirk of how we measure progress. No emergence, just math.
Why “Emergence” Is So Seductive
Why does the language of “emergence” stick? Because it borrows from biology and philosophy. Life “emerges” from chemistry as consciousness “emerges” from neurons. It makes LLMs sound like they’re undergoing cognitive leaps. Some argue emergence is a hallmark of complex systems, and there’s truth to that. So, to a degree, it does capture the idea of surprising shifts.
But we need to be careful. What’s happening here is still math, not mind. Calling it emergence risks sliding into anthropomorphism, where sudden performance shifts are mistaken for genuine understanding. And it happens all the time.
A Useful Imitation
The 2022 paper gave us the language of “emergence.” The 2025 paper shows that what looks like emergence is really closer to a high-complexity phase change. It’s the same math and the same machinery. At small scales, positional tricks (word sequence) dominate. At large scales, semantic structures (multidimensional linguistic analysis) win out.
No insight, no spark of consciousness. It’s just a system reorganizing under new constraints. And this supports my larger thesis: What we’re witnessing isn’t intelligence at all, but anti-intelligence, a powerful, useful imitation that mimics the surface of cognition without the interior substance that only a human mind offers.
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So the next time you hear about an LLM with “emergent ability,” don’t imagine Archimedes leaping from his bath. Picture water freezing. The same molecules, new structure. The same math, new mode. What looks like insight is just another phase of anti-intelligence that is complex, fascinating, even beautiful in its way, but not to be mistaken for a mind.
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