The software sector has experienced a significant downturn, with billions of dollars being wiped out of the market. The selloff is driven by concerns that artificial intelligence (AI) tools could soon disrupt the world's biggest software businesses, enabling applications to be made more quickly and at a lower cost.
Europe's biggest company by market value, SAP SE, dropped as much as 7.1% in Frankfurt, erasing almost €22 billion ($26 billion) at the session low. Other companies, such as (link unavailable) Ltd., Salesforce Inc., and Adobe, have also seen significant declines in their stock prices.
Some analysts attribute the drop to concerns over the long-term competitive threat of AI. However, not all analysts agree that the fear is justified. Jefferies analyst Brent Thill believes that the fear is overblown, while Morgan Stanley analyst Josh Baer upgraded (link unavailable) to overweight, saying the stock's pullback "more than incorporates" risks of AI disrupting search advertising and performance marketing.
The impact of AI on the software industry is a topic of much debate, with some experts predicting significant disruption and others seeing opportunities for growth and innovation. As the industry continues to evolve, it will be interesting to see how companies adapt to the changing landscape and leverage AI to drive innovation and growth.
