Software stocks faced a significant downturn on Thursday, driven by disappointing earnings reports from ServiceNow and IBM. ServiceNow’s shares plummeted 17%, marking its worst trading day ever, as the company cited geopolitical tensions as a headwind for subscription revenue. IBM, despite beating earnings expectations, saw its stock drop 9% after maintaining its guidance, indicating investor concerns about future growth.
This sell-off reflects broader anxieties within the tech sector regarding the potential disruption posed by emerging AI technologies from firms like Anthropic and OpenAI. The iShares Expanded Tech-Software ETF (IGV) fell about 5% on Thursday and is down approximately 18% year-to-date, as investors reassess the viability of traditional cloud subscription models in light of AI advancements.
As major tech companies like Alphabet, Amazon, and Microsoft prepare to report earnings next week, market participants will be closely monitoring their performance to gauge whether they can sustain their relative strength amid the sector’s turmoil.
Source: cnbc.com