Global software stocks were under heavy pressure on Wednesday as a fast-spreading selloff rippled from Europe to the U.S. and deep into Asia, driven by a growing fear that artificial intelligence isn’t just disrupting workflows — it may be dismantling entire business models.
What began as a sharp pullback has now turned into something more unsettling: a crisis of confidence in the long-term value of traditional software and data services.
Europe’s Software Giants Lose Their Footing
European analytics, professional services, and software companies slid for a second straight session in volatile trading, mirroring losses seen across global peers. The selling intensified after Anthropic’s latest AI developments reignited fears that AI-native tools could replace — rather than support — incumbent software platforms.
Legal and data analytics leaders RELX and Wolters Kluwer were hit particularly hard. Both stocks dropped around 3% in early trade after suffering brutal losses a day earlier, when RELX plunged more than 14% and Wolters Kluwer sank over 12%.
Meanwhile, London Stock Exchange Group extended its rout, falling as much as 6.9% and compounding Tuesday’s near-13% collapse — a stunning reversal for a name long viewed as defensive and resilient.
Advertising and media stocks, widely seen as vulnerable to AI-driven automation, also remained under pressure. France’s Publicis slid 3.6%, while Britain’s WPP lost 3%, both hitting fresh lows.
Even Europe’s software heavyweight SAP couldn’t escape the downdraft. Shares dropped more than 3%, just a week after a weak cloud revenue outlook erased roughly $40 billion from its market value.
Asia Catches the Cold
The anxiety didn’t stop in Europe. Asian tech markets followed suit, with Indian IT exporters sliding sharply and Japanese software and systems developers taking steep losses.
Shares of NEC, Nomura Research, and Fujitsu plunged between 8% and 11%, dragging Japan’s Nikkei index lower overnight and underscoring how deeply the AI fear trade has gone global.
U.S. Software Stocks Struggle to Stabilize
Across the Atlantic, U.S. software and services stocks were mixed in premarket trading, but the broader trend remained grim. The sector has already fallen nearly 13% over five consecutive sessions.
Thomson Reuters, parent of Reuters News, was flat in thin trading — a fragile pause after its record 16% collapse on Tuesday. Investors are increasingly worried that AI could directly threaten its core legal and professional services business.
Elsewhere, the damage continued, albeit more selectively. Salesforce, CrowdStrike, and Adobe each slipped about 0.2%, while Intuit eased 0.6%. Atlassian was a rare bright spot, edging up 0.6%.
Anthropic: The Spark That Lit the Fuse
One of the key catalysts behind the selloff was Anthropic’s recent launch of plug-ins for its Claude Cowork AI agent. Released late last week, the tools allow automated execution of tasks across legal research, sales, marketing, and data analysis — areas that have long been the bread and butter of traditional software firms.
To investors, it wasn’t just a product update. It was a warning shot.
From AI Euphoria to AI Fear
Market watchers say the selloff reflects a deeper shift in sentiment — from excitement about AI-powered growth to fear of AI-driven displacement.
JP Morgan analyst Toby Ogg summed up the mood bluntly:
“The sector isn’t just guilty until proven innocent, but is now being sentenced before trial.”
He added that investor appetite to step in remains weak, citing mounting risks from AI-native competitors and customers increasingly building their own in-house solutions.
Regulators have also been sounding alarms. With blockbuster gains in Nvidia and AI hyperscalers like Microsoft pushing U.S. indices to record highs, institutions including the International Monetary Fund and the Bank of England have warned that parts of the tech market may be inflating into a bubble.
‘Nowhere to Hide’
For investors, the uncertainty is proving toxic.
“All innovation means there is going to be disruption at some point,” said Ben Barringer, head of technology research at Quilter Cheviot. “And we appear to be at a significant point in that journey for software and IT services companies.”
With little clarity on how powerful AI agents will become — and how quickly — many investors are choosing the simplest option: stepping aside entirely.
As Barringer put it, “Investors are shunning the software market altogether, leaving nowhere to hide.”
For now, the AI revolution that once promised limitless growth is forcing a brutal reckoning — and the global software sector is feeling every tremor.