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

Impact of AI on Software Stocks

By Danilo Masoni

Market Reactions

MILAN, Feb 4 (Reuters) - A deep selloff in global software stocks entered a second day on Wednesday, reflecting growing concerned about how advances in artificial intelligence might impact these companies' livelihoods.

Sector Analysis

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.

Future Outlook

On Wednesday, Britain’s RELX and the Netherlands’ Wolters Kluwer, 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 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 slid 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.

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 fell almost 5% and Britain’s WPP lost 3.3%.

Shares in SAP, 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 and so-called AI hyperscalers like Microsoft 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.” 

(Reporting by Danilo Masoni; additional reporting by Siddarth S; Editing by Amanda Cooper and Dhara Ranasinghe)