Anthropic Sparks Selloff as AI Upends Global Software Sector
A deep selloff in global software stocks entered a second day on Wednesday, reflecting growing concerns about how advances in artificial intelligence might impact these companies’ livelihoods.
European data analytics, professional services and software stocks fell further, following declines in shares in rivals around the world, after Anthropic’s new legal artificial intelligence model served a fresh reminder of the threat to those companies whose business models are seen as most vulnerable to potential AI disruption.
On Wednesday, Britain’s RELX (REL.L), opens new tab and the Netherlands’ Wolters Kluwer (WLSNc.AS), opens new tab, which both provide analytics services to the legal industry, hit new lows, each down almost 3% in morning European trade.
Shares in London Stock Exchange Group (LSEG.L), opens new tab fell another 6%, extending Tuesday’s near 13% drop.
Indian IT exporters (.NIFTYIT), opens new tab also fell sharply, while Japanese software and systems developers NEC (6701.T), opens new tab, Nomura Research (4307.T), opens new tab and Fujitsu (6702.T), opens new tab slid between 7% and 11%, dragging the Nikkei (.N225), opens new tab benchmark index lower overnight.
The selloff comes against a backdrop of heightened concern that a tech bubble could burst, posing financial stability risks.
JP Morgan 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,” he added, noting that software companies face multiple risks, including competition from AI-native firms and clients building their own solutions in-house.
ANTHROPIC THE SPARK BEHIND THE SELLOFF
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 (PUBP.PA), opens new tab fell almost 5% and Britain’s WPP (WPP.L), opens new tab lost 3.3%.
hares in SAP (SAPG.DE), opens new tab, Europe’s largest software company, dropped over 3%, a week after a disappointing cloud revenue forecast wiped around $40 billion off its market value.
Stellar gains in chipmakers like Nvidia (NVDA.O), opens new tab and so-called AI hyperscalers like Microsoft (MSFT.O), opens new tab have driven U.S. stocks to record highs. But as AI mania has spread across markets, regulators and policymakers like the International Monetary Fund and the Bank of England have warned about the risks of a dangerous 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 around exactly what AI agents can do, and as such, investors are choosing to shun the software market altogether, leaving nowhere to hide.”
(This story has been refiled to fix the garble in the lead)
Reporting by Danilo Masoni; additional reporting by Siddarth S; Editing by Amanda Cooper and Dhara Ranasinghe
reuters
