In today’s market, all it takes is the word “AI” to wipe off billions in market value.
| From the desk of Miles Everson: Investing has enabled many individuals to attain financial security and independence for decades. That’s why every Wednesday, I share investing insights to help people build their wealth through this activity. In today’s “The Independent Investor,” I’ll talk about a company that managed to wipe off billions in market value in a niche sector. Curious? Keep reading below to know why! |
In today’s market, all it takes is the word “AI” to wipe off billions in market value. The Singing Machine Company was founded in the 1980s and specialized in making karaoke machines. Back then, those machines were all the rage, propelling the firm to success. Unfortunately, at-home concerts aren’t the booming business they used to be 40 years ago… and during that time, The Singing Machine Company spent those decades quietly fading from the spotlight. The company managed to scrape together a few decent years in the 2010s when it was licensed and featured in late night host James Corden’s popular “Carpool Karaoke” segment.
Fast forward to 2024, the company’s revenues fell to USD 24 million, a 13-year low. In the midst of this decline, Gary Atkinson, the CEO of The Singing Company did something unprecedented in his company’s history: He got rid of the karaoke machines and went all in on artificial intelligence (AI). How? The Singing Machine Company bought a logistics business called SemiCab in 2024. Then after a few months, the karaoke machine maker rebranded to Algorhythm Holdings. The rebranded company flew under the radar. In August 2025, it divested its karaoke business. Algorhythm's stock quietly slid. By November 2025, shares dropped by 99%, putting it at risk of getting delisted from the Nasdaq. It was a crisis. … and to overcome this, the company needed a miracle to boost its shares and capture eyeballs while doing so. So, what did Atkinson do? He showed up everywhere and declared that Algorhythm had the potential to quadruple freight productivity without adding headcount by using AI-powered tech! Media organizations like The Wall Street Journal, CNBC, and Bloomberg picked up on this story. The market lost its mind in the ensuing news cycle and it even impacted the markets. You see, Algorithm’s software—if it lives up to the hype—posed a direct challenge to the transportation and logistics sector. When the story about the company spread far and wide, firms operating in the sector took a hit. Logistics provider C.H. Robinson —a USD 20 billion-plus industry giant—plunged 15% in a day. J.B. Hunt Transport Services, a trucking powerhouse worth roughly the same, dropped 5%. Algorhythm's announcement wiped out a total of USD 17.4 billion in market value… a wipe out that occurred because of a former karaoke-machine maker. Situations like this shouldn’t happen. However, According to Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Officer of Altimetry Financial Research, they’re becoming more and more common. So far in 2026, new AI developments have caused several instances of panic selling as investors are terrified that tiny AI startups can replicate big Software as a Service (SaaS) products. A similar situation played out in January 2026 when AI juggernaut Anthropic updated its Claude Code and Cowork platforms. These tools can compete with ChatGPT, help automate programming projects, and even develop software for the legal and medical fields. The entire software sector sold off on the news. The S&P Software & Services Select Industry Index plummeted 20%. Many companies that took a hit had nothing to do with those niches. Some of these updates could be game changers. They could disrupt some of today's biggest companies. However, Professor Litman emphasized that it’s far too early to say for sure. That’s why in the meantime, multibillion-dollar giants—and entire sectors–have no business selling off every time someone drops the word “AI” in niche industries. Hope you’ve found this week’s insights interesting and helpful. Stay tuned for next Wednesday’s The Independent Investor! Every so often, the economy sends out a low, almost imperceptible rumble. Learn more about America’s next great building boom in next week’s article! |
Miles Everson
CEO of MBO Partners and former Global Advisory and Consulting CEO at PwC, Everson has worked with many of the world's largest and most prominent organizations, specializing in executive management. He helps companies balance growth, reduce risk, maximize return, and excel in strategic business priorities.
He is a sought-after public speaker and contributor and has been a case study for success from Harvard Business School.
Everson is a Certified Public Accountant, a member of the American Institute of Certified Public Accountants and Minnesota Society of Certified Public Accountants. He graduated from St. Cloud State University with a B.S. in Accounting.
