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The software stock sector has collapsed, and no one 'dares to catch a falling knife.'
The S&P 500 Software & Services Index fell for the sixth consecutive trading session, but this selloff failed to attract any significant bottom-fishing buying. Even Microsoft, traditionally regarded as a safe haven, was not spared, with short sellers increasing their positions against the trend. Current market sentiment has evolved from valuation concerns at that time to deep anxiety over the potential disruption of traditional software business models by artificial intelligence.
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Fears of an AI-driven industry apocalypse trigger widespread sell-off in software stocks.
Wall Street's skepticism about the software sector has persisted for some time, but recently market sentiment has escalated from 'bearish' to nearly 'apocalyptic' levels. Traders are selling off stocks across the industry due to mounting concerns that artificial intelligence may bring disruptive impacts to the sector. 'We call it the 'SaaSpocalypse' — the doomsday scenario for Software as a Service (SaaS) stocks,' said Jeffrey Favuzza from Jefferies' equity trading division. 'The current trading is essentially a 'get me out' type of sell-off.' This anxiety became further highlighted on Tuesday. AI ini