Software Under Threat: How AI Is Changing Market Expectations
4 February 15:29
On Tuesday, February 3, shares of technology and software companies plummeted on global stock markets. Investors began selling off shares en masse following news of rapid progress in the field of artificial intelligence, which, in their view, could undermine the business models of traditional software developers.
The Wall Street Journal reports on this, as cited by "Komersant Ukrainian".
According to the publication, the catalyst for the decline was a statement by the startup Anthropic regarding the expansion of the functionality of its AI assistant Claude—specifically in the areas of legal analytics and document preparation. This heightened fears that AI tools are capable of directly replacing commercial software products.
Which companies were hit first
The sharpest declines were recorded in the legal and financial information services sectors. Shares of Thomson Reuters, LegalZoom, and the London Stock Exchange Group lost more than 12% in a single trading session.
Subsequently, the sell-off spread to the broader software market. Shares of PayPal, Expedia Group, EPAM Systems, Equifax, and Intuit fell by more than 10%.
Two S&P indices tracking software and financial analytics companies collectively lost about $300 billion in market capitalization.
Overall market reaction
Amid the sell-off:
- The Nasdaq Composite fell by 1.4%;
- The S&P 500 fell by 0.8%;
- The Dow Jones, less dependent on the tech sector, lost about 0.3%.
Large investment funds that had been actively investing in software companies also felt the pressure. Shares of Ares Management, KKR, and Blue Owl Capital fell by more than 9%, while Apollo Global Management and Blackstone lost over 4.5%.
Why AI caused panic
The current market reaction is linked not only to specific statements by individual companies but to a broader fear of technological displacement.
“If AI is truly developing as quickly as OpenAI and Anthropic claim, this becomes a serious problem. Investors are starting to dump any companies that might be at risk, and that’s practically the entire software market,” explained Art Hogan, a strategist at B. Riley Wealth Management.
Despite software companies’ assurances that their value lies not only in code but in data ecosystems, integrations, and customer trust, investor jitters persist.
The software sector, which for years was considered one of the most reliable for investors, now faces a new type of risk— the risk of being displaced by technology, rather than a cyclical downturn or regulatory pressure.
Against this backdrop, major U.S. companies are already announcing massive layoffs.
