Global software stocks hit by Anthropic wake-up call on AI disruption

By Danilo Masoni

Feb 4 (Reuters) – European and U.S. software stocks struggled to find support on Wednesday as a sector-wide selloff spread to Asia, fuelled by mounting worries that advances in artificial intelligence could upend companies’ business models.

European data analytics, professional services ​and software stocks fell for a second day in volatile trade, mirroring losses in global peers after Anthropic’s new legal AI ‌tool underscored the threat to businesses seen as most exposed to AI disruption.

The declines came even as Nvidia CEO Jensen Huang played down fears AI would replace software and related ‌tools, calling the idea “illogical” and saying “time will prove itself.”

Some analysts said the sell-off reflected a scramble to shield portfolios from AI disruption as the rapid advances in the technology muddy valuations and cloud business prospects beyond the standard three-to-five year forecasts of companies.

Software is seen as especially vulnerable to disruption as tools such as Claude increasingly automate the routine tasks that have long underpinned the industry’s pricing power.

“We are now in an environment where the sector isn’t just ⁠guilty until proven innocent but is now being ‌sentenced before trial,” J.P. Morgan analyst Toby Ogg said.

“Our sense from investor discussions is that general appetite to step in remains generally low,” he added, citing risks including competition from AI-native firms and clients building their own solutions ‍in-house.

Britain’s RELX and the Netherlands’ Wolters Kluwer – major providers of analytics to the legal industry – dropped about 3% in morning trade before paring some losses, after plunging more than 14% and 12%, respectively, on Tuesday.

Shares of U.S. software and services firms were mixed in premarket trading after a near 13% slide over five straight sessions. ​Nasdaq-listed Thomson Reuters, the parent company of Reuters News, was flat in light volume after Tuesday’s record 16% slump on fears that AI ‌could threaten its core legal division.

London Stock Exchange Group slid as much as 6.9%, extending Tuesday’s near 13% drop.

Indian IT exporters also fell sharply, while Japanese software and systems developers NEC, Nomura Research and Fujitsu sank between 8% and 11%, dragging the Nikkei benchmark index lower overnight.

ANTHROPIC THE SPARK BEHIND THE SELLOFF

One trigger for Tuesday’s selloff was Anthropic’s launch of plug-ins for its Claude Cowork agent on Friday, enabling automated tasks across legal, sales, marketing and data analysis.

Advertising stocks – viewed as among the most exposed in European media to AI – also stayed under pressure. France’s Publicis was last down ⁠3.6% and Britain’s WPP lost 3%, both hitting new lows.

Shares in SAP, Europe’s largest ​software company, dropped more than 3%, a week after a disappointing cloud revenue forecast ​wiped around $40 billion off its market value.

With stellar gains in chipmaker Nvidia and so-called AI hyperscalers like Microsoft pushing U.S. stocks to record highs, regulators and policymakers – including the International Monetary Fund and the Bank of England – have warned of ‍the risks of a potential bubble.

“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 around ⁠exactly what AI agents can do, and as such, investors are choosing to shun the software market altogether, leaving nowhere to hide.”

Salesforce, CrowdStrike, Adobe each dipped about 0.2% in ‌U.S. premarket trading, while Intuit eased 0.6%. Atlassian Corp firmed 0.6%.

(Reporting by Danilo Masoni. Additional reporting by Medha Singh and Siddarth ‌S. Editing by Amanda Cooper, Dhara Ranasinghe, Mark Potter and Anil D’Silva)