Market Stabilization in Software and Data Services Amid AI Concerns
February 5: The stock prices of software and data services steadied on Thursday following a tumultuous selloff, as investors sought indicators regarding the potential impact of rapidly evolving artificial intelligence technologies on the demand for traditional software and subscription models.
ServiceNow experienced a modest increase of 0.7 percent, while Salesforce saw a slight uptick of 0.1 percent. Conversely, Microsoft saw a decrease of 0.8 percent in premarket trading after substantial declines earlier this week.
Notably, the S&P 500 software and services index has lost over $800 billion in market capitalization during the past six trading sessions.
The performance of international technology stocks presented a mixed picture. The London Stock Exchange Group surged by 6.4 percent, while data analytics firms RELX and Wolters Kluwer witnessed gains of 2.4 percent and 1.5 percent, respectively.
In stark contrast, India’s software exporters index, which includes notable companies such as HCL Technologies and Wipro, fell by 0.7 percent, following a staggering 6 percent drop the previous day, marking its gravest decline in almost six years.
Thomson Reuters, the parent of the Westlaw legal database and Reuters news agency, saw an increase of 3.1 percent in trading volume after its fourth-quarter results largely met market expectations. The company reported observable advantages arising from its investments in artificial intelligence.
This rebound came after the stock faced an unprecedented decline earlier this week, spurred by investor anxieties surrounding a new plug-in from Anthropic’s Claude that could potentially disrupt its legal operations.
“The market is questioning the earnings growth trajectory of software companies and whether it faces disruption,” remarked Manish Kabra, lead U.S. equities and multi-asset strategist at Societe Generale in London.
“Currently, we have advised against purchasing software stocks for that reason. I anticipate that numerous cyclical sectors will perform better.”
This selloff in software shares parallels a broader migration from technology investments to more value-oriented sectors such as consumer staples, energy, and industrials, which had lagged during the bullish market phase beginning in October 2022.
Alphabet saw its shares decline by 2.6 percent after the parent company of Google projected a potential doubling of its capital expenditures this year, igniting concerns regarding the returns on its substantial AI investments.
Recent weeks have witnessed heightened market volatility across equities, commodities, and digital currencies, which participants attribute to leveraged investors rapidly liquidating their positions.
Precious metals such as gold and silver resumed their downward trajectory on Thursday following a historic collapse earlier in the week.
“There are numerous relative bets unraveling, and it appears that a sort of reset is occurring within market internals, but only time will provide clarity,” remarked John Hardy, Saxo’s global head of macro strategy, during a podcast.
“The market is highly leveraged. We have reached record levels of margin lending, thus remaining vigilant is essential.”
Source link: Channelnewsasia.com.
