US software stocks slammed on mounting fears over AI disruption, lose $1 trillion in week

Group 1: Market Overview - U.S. software and data services companies have experienced a significant decline, with the S&P 500 software and services index dropping 4.6% and losing approximately $1 trillion in market value since January 28, referred to as "software-mageddon" [1] - Major tech companies affected include ServiceNow, which fell 7.6%, Salesforce, which slipped 4.7%, and Microsoft, which sank 5% [1] Group 2: Investor Sentiment - The current market sentiment is characterized by a "sell-everything mindset," indicating widespread fear among investors [2] - Concerns about the impact of artificial intelligence on various sectors have led to a lack of dip-buying, with the S&P 500 software and services index trading about 21% below its 200-day moving average, the lowest since June 2022 [4] Group 3: Company-Specific Insights - Thomson Reuters, despite raising its dividend and reporting fourth-quarter results in line with estimates, fell 5.6% due to investor concerns over AI disrupting its legal business [2][3] - Goldman Sachs' chief U.S. equity strategist noted that while AI investments are yielding tangible benefits, the uncertainty surrounding AI's long-term impact poses risks to near-term earnings [3] Group 4: Sector Rotation - There is a notable rotation out of technology stocks into value-oriented sectors such as consumer staples, energy, and industrials, which had previously lagged in the bull market that began in October 2022 [6] - This trend reflects a broader strategy of de-risking from technology investments, which has been observed since the beginning of the year [6]