The software barometer shed another 1.9% on Feb 4, down 17% over the past week and over 29% since it peaked last October. “We expect volatility to persist in the coming days as investors weigh the impact of potential business model disruptions from AI,” UBS analysts wrote in a Feb 4 note.
If you are befuddled by the recent mayhem on Wall Street, here is a simple explanation: Investors now believe that AI agents like those being developed by start-ups such as Anthropic and OpenAI are ready to supersede and replace enterprise software made by the likes of behemoth Microsoft and its peers like Oracle, Salesforce, Palantir Technologies, Adobe and ServiceNow. Simply put, the bots are coming for software and are threatening to upend the sector’s business model.
Not surprisingly, then, the market’s sell-off in the enterprise software space has been relentless as investors stampede towards the exit. On Feb 3, IGV, the exchange-traded fund (ETF) that tracks the iShares Expanded Tech-Software Sector index, was down a whopping 4.8%.
