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Bill McDermott, chairman and CEO of ServiceNow, speaks during an interview on the floor at the New York Stock Exchange on Oct. 26, 2023. Brendan Mcdermid | Reuters Software stocks on Thursday slid deeper into an ongoing intense sell-off this year as investors recoiled from the sector on growing fears that artificial intelligence could upend many firms’ business models. The iShares Expanded Tech-Software Sector ETF (IGV) dropped 5.4% for its biggest one-day decline since last April during the tariff-triggered downturn. The fund is now down about 22% from its recent high, pushing the software industry into bear-market territory and underscoring how quickly sentiment has turned against one of Wall Street’s former favorite industries. Month to date, IGV is down more than 13%, on pace for its worst month since October 2008 when the fund fell 23%. Stock Chart IconStock chart icon The iShares Expanded Tech-Software Sector ETF over one year Stock Chart IconStock chart icon ServiceNow 5 days “Good, but not good enough,” Morgan Stanley analysts said in a note of ServiceNow’s report. “In an environment of heightened investor skepticism on incumbent application vendors, stable growth, in line with expectations, likely falls short of shifting the narrative.” The pressure has deepened across the sector as investors question whether AI competitors and automation tools could erode demand for traditional software licenses and workflows. Valuations once justified by steady subscription growth are being recast as investors assess the possibility that AI could permanently shrink long-term revenue potential. Megacap Microsoft added to the pressure, sliding 10% after reporting a slowdown in cloud growth for the fiscal second quarter, putting the stock on track for its steepest one-day drop since March 2020. The company also issued softer-than-expected guidance on operating margin for the fiscal third quarter. Investor unease has been amplified by the rapid pace…

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Filed under: News - @ January 30, 2026 7:24 am