tech
January 29, 2026
Software stocks enter bear market on AI disruption fear with ServiceNow plunging 10%
The iShares Expanded Tech-Software Sector ETF is on pace for its biggest one-day decline since April 4 during the tariff-triggered downturn.
TL;DR
- Software stocks are undergoing an intense sell-off due to fears that AI could disrupt business models.
- The iShares Expanded Tech-Software Sector ETF (IGV) has dropped significantly, entering bear-market territory.
- Solid earnings from ServiceNow did not prevent its shares from plunging, as investor sentiment is cautious about incumbent application vendors.
- Investors are concerned that AI competitors and automation tools may erode demand for traditional software licenses and workflows.
- Microsoft's stock also fell due to a slowdown in cloud growth and softer-than-expected guidance.
- The rapid pace of AI development, exemplified by Anthropic's recent model launches, is amplifying investor unease.
- SAP experienced a notable slide after reporting weaker-than-expected growth in its cloud contract backlog.
- ServiceNow's CEO argued that AI concerns are misplaced, positioning the company as a gateway to embedding AI into enterprise workflows.
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