Veriton Investment

Software Stocks Slide Again as AI Threats Rattle Investors

(Bloomberg) -- Software makers, advertising agencies and investment firms were caught in another wave of selling as investors worried about the business risks they face from better artificial intelligence tools.

In Europe, software giant SAP SE slid 3.4% to the lowest level in two years. Relx Plc, which owns the data analytics service LexisNexis, dropped 2.5%. Publicis Groupe SA, Rightmove Plc, and EQT AB also slumped anew.

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While the losses were smaller than Tuesday, they still point to lingering concerns about the threat posed by tools being released by Anthropic PBC. Products like Claude Code and Cowork are the latest evidence that the AI has expanded from a web-based chatbots to algorithms that can automate a slew of enterprise workflows.

“There’s clearly indiscriminate selling across the entire software cluster,” said Karen Kharmandarian, senior equity investment manager at Mirova in Paris. “There’s no floor, the downward momentum is too strong. It looks a bit like capitulation.”

To hedge against the disruptive nature of AI, investors have instead flocked to companies that have factories and infrastructure. Chemicals, telecommunications and automobiles were the best-performing sectors within Europe’s benchmark Stoxx 600 on Wednesday.

Toby Ogg, an analyst covering European software at JPMorgan Chase & Co., said investors’ appetite to invest in technology is still low, even after they have reduced holdings over the past 12 to 18 months.

“We are now in an environment where the sector isn’t just guilty until proven innocent, but is now being sentenced before trial,” he wrote in a note. For software companies, “better-than-expected results are no longer enough to convince the market.”

--With assistance from Sabrina Nelson Garcinuño and Michael Msika.

(Updates throughout with stock trading)