AI is disrupting traditional industries, with U.S. software stocks bearing the brunt.

(New York, Feb 5)
Concerns that artificial intelligence (AI) could disrupt traditional software business models have intensified, triggering a prolonged sell-off in related stocks. A basket of U.S. software shares tracked by Goldman Sachs plunged 6% on Tuesday (Feb 3, ET), marking the steepest single-day decline since April last year, when tariff announcements by U.S. President Donald Trump sparked a broad market sell-off.
The downturn wiped out an estimated US$285 billion in market value across software, financial services, and asset management industries.

Over recent months, investors have closely monitored the risks facing software companies amid rapid advances in AI. AI startup Anthropic, backed by Nvidia, has joined a growing wave of companies developing AI tools for the legal sector. Earlier, startups such as Legora and Harvey AI had already launched products claiming to free lawyers from routine tasks.

Investor anxiety intensified further after Anthropic released a new product, Claude Cowork, last month. Other technology launches have also fueled selling pressure, including Alphabet’s introduction of Project Genie, a tool capable of generating immersive virtual worlds from text or image prompts, which dragged video game stocks lower last week.

There are also signs that software companies’ earnings performance is lagging behind other technology peers. According to compiled data, only 71% of software firms in the S&P 500 have beaten revenue expectations this earnings season, compared with 85% across the broader technology sector.

Facing potential AI disruption

Blackstone President and Chief Operating Officer Jonathan Gray said during an online broadcast that the economy is undergoing a shift, warning that software companies—which once set performance records—may now face disruption from AI.

Beyond legal and data services stocks, most software and fintech shares have also been affected. Listed private equity funds and major alternative asset managers on Wall Street have similarly come under pressure, reflecting their exposure to the software sector.

Shares of Thomson Reuters plunged more than 15% on Tuesday, making it one of the worst-performing stocks in the U.S. and Canadian markets alongside LegalZoom.