Microsoft, Palantir Lead A Software Rout Not Seen Since 2008 Lehman Crisis

Core Viewpoint - The software sector is experiencing its worst month since the Lehman Brothers collapse, with significant declines in stock prices and growing concerns about the impact of artificial intelligence on traditional business models [1][5]. Group 1: Market Performance - The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) is on track for its steepest monthly drop since October 2008, with a single-day decline of approximately 6% [1][3]. - Microsoft Corp. (NYSE:MSFT) saw a drop of over 12%, marking its worst day since the onset of the lockdown [2]. - High-profile software companies like Palantir Technologies Inc (NASDAQ:PLTR), Oracle Corp (NASDAQ:ORCL), and AppLovin Corp (NASDAQ:APP) have all experienced declines of about 20% for the month [3]. Group 2: Analyst Insights - Analysts are increasingly suggesting that the current selloff reflects changing fundamentals rather than just short-term disappointments, as AI technology begins to transform software development and consumption [5]. - Thomas Shipp from LPL Financial raised the question of whether software businesses can survive the advancements in AI, noting the historical scalability of software businesses [5]. - Subscription-based models have traditionally supported premium valuations, but these could be at risk if software companies are displaced by AI advancements [6]. Group 3: Future Considerations - Most software producers will need to integrate their own AI enhancements to maintain market share in the evolving landscape [7].