ServiceNow and IBM results trigger software stock selloff

Investing.com -- Software stocks fell sharply on Thursday following disappointing earnings from ServiceNow and IBM, intensifying concerns about artificial intelligence disruption to traditional business models.

ServiceNow shares dropped 18%, heading toward the company's worst trading day on record. The company slightly exceeded Wall Street estimates on Wednesday but cited the U.S.-Iran war as creating a headwind for quarterly subscription revenue. IBM beat earnings and revenue expectations but kept its guidance unchanged, with shares falling 9.25%.

The selloff extended across the software sector. Salesforce declined 9.4%, while Hubspot fell 9.3%. Adobe dropped 7.4%, Intuit slid 7.6%, and Oracle decreased about 6%. Workday shares fell 9%. The iShares Expanded Tech-Software ETF, which tracks the sector, declined approximately 5% on Thursday and is down about 18% year to date.

The software sector faces ongoing pressure from concerns that AI tools from companies like Anthropic and OpenAI will displace the established cloud subscription model.

Major technology companies are scheduled to report earnings next week. Alphabet, Amazon, Meta, and Microsoft will release results on Wednesday, with Apple following on Thursday.

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