Software and data services equities showed signs of stabilization on Thursday after a punishing stretch of declines, as market participants searched for evidence that accelerating artificial intelligence tools might be reducing demand for conventional software and recurring-subscription businesses.
In U.S. premarket trade, ServiceNow rose 0.7% and Salesforce ticked up 0.1%, while Microsoft eased 0.8% after earlier steep drops during the week. The S&P 500 software and services index has relinquished more than $800 billion in market value over the past six sessions, underscoring the scale of the move.
Performance among overseas technology and data stocks was uneven. London Stock Exchange Group shares climbed 6.4%, while data analytics firm RELX gained 2.4% and Netherlands-based Wolters Kluwer advanced 1.5%.
By contrast, India’s software exporters index slipped 0.7% on Thursday, following a 6% plunge the previous day that was its worst single-session decline in nearly six years. That index includes names such as HCL Technologies and Wipro, which were implicated in the recent weakness.
Thomson Reuters rose 3.1% in light trading after reporting fourth-quarter results that were largely in line with estimates. The company said it is observing tangible benefits from its AI investments. Earlier in the week the stock had posted a record one-day decline after investors expressed concern that a new plug-in from Anthropic’s Claude could disrupt Thomson Reuters’ legal database business.
Market strategists highlighted that the selloff has forced a reassessment of software companies’ earnings compounding characteristics. Manish Kabra, London-based lead U.S. equities and multi-asset strategist at Societe Generale, said: "The market is putting a question on the earnings compounding nature of software companies, whether that gets disrupted." He added: "At the moment, we have not suggested people to buy software for that reason. I think a lot of cyclical sectors will do better."
The software decline has coincided with a broader rotation out of technology and into value-oriented sectors that had lagged during the earlier bull market - notably consumer staples, energy and industrials.
Alphabet shares fell 2.6% after the Google parent said its capital expenditure could as much as double this year, a disclosure that raised questions about the return on its sizable AI investments.
Observers also pointed to rising volatility across multiple asset classes in recent weeks. Market participants attributed much of the turbulence to leveraged investors rapidly unwinding positions, which amplified moves in equities, commodities and digital assets.
Precious metals were affected as well: gold and silver resumed declines on Thursday after suffering a historic rout earlier in the week.
John Hardy, Saxo’s global head of macro strategy, characterized the backdrop as a broad reset of market internals. "This is a lot of relative bets out there going wrong, and then there’s some kind of reset going on in the market internals, but time will tell," he said on a podcast. He added: "There’s a lot of leverage in this market. We’ve reached record leverage in terms of margin lending, etc., so forewarned is forearmed."
Contextual note: Market moves described above reflect trading and comments from the period referenced and relate directly to company and market developments noted by the firms and strategists quoted.