By Danilo Masoni
Milan — A deep selloff in global software stocks entered a second day on Wednesday, reflecting growing concern about how advances in AI could affect those companies’ livelihoods.
European data analytics, professional services and software stocks fell further after declines in shares in rivals around the world as Anthropic’s new legal AI model served a fresh reminder of the threat to companies whose business models are seen as most vulnerable to potential AI disruption.
Britain’s RELX and the Netherlands’ Wolters Kluwer, which provide analytics services to the legal industry, hit new lows. Each was down almost 3% in morning European trade on Wednesday.
Shares in London Stock Exchange Group fell another 6%, extending Tuesday’s near 13% drop.
Indian IT exporters also fell sharply, while Japanese software and systems developers NEC, Nomura Research and Fujitsu plunged between 7% and 11%, dragging the Nikkei benchmark index lower overnight.
The selloff comes against a backdrop of heightened concern that a tech bubble could burst, posing financial stability risks.
JPMorgan analyst Toby Ogg said investors’ main concerns centred on longer-term growth assumptions, issues that extend well beyond standard three-year forecast horizons.
“The sector isn’t just guilty until proven innocent but is now being sentenced before trial,” he said. “Our sense from investor discussions is that general appetite to step in remains generally low.”
Ogg pointed out that software companies face multiple risks, including competition from AI native firms and clients building their own solutions in-house.
Bubble fears
One of the triggers behind Tuesday’s selloff was the launch of Anthropic’s legal plug-in for its Claude generative AI chatbot.
Advertising companies — seen as among the most exposed parts of European media to AI — also remained under pressure. France’s Publicis fell almost 5% and Britain’s WPP lost 3.3%.
Shares in SAP, Europe’s largest software company, dropped more than 3%, a week after a disappointing cloud revenue forecast wiped about $40bn off its market value.
Stellar gains in chipmakers such as Nvidia and so-called AI hyperscalers like Microsoft have driven US stocks to record highs. But as AI mania has spread across markets, regulators and policymakers including the IMF and the Bank of England have warned about the risks of a bubble forming.
“All innovation means there is going to be disruption at some point, and we appear to be at a significant point in that journey for software and IT services companies,” said Ben Barringer, head of technology research at Quilter Cheviot.
“There is a lot of uncertainty regarding exactly what AI agents can do, and as such, investors are choosing to shun the software market altogether, leaving nowhere to hide.”
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