Global software stocks hit by Anthropic wake-up call on AI disruption

By Danilo Masoni

Feb 4 (Reuters) - European and U.S. software stocks struggled to find support on Wednesday as a sector-wide selloff spread to Asia, fuelled by mounting worries that advances in artificial intelligence could upend companies' business models.

European data analytics, professional services and software stocks fell for a second day in volatile trade, mirroring losses in global peers after Anthropic's new legal AI tool underscored the threat to businesses seen as most exposed to AI disruption.

The declines came even as Nvidia CEO Jensen Huang played down fears AI would replace software and related tools, calling the idea "illogical" and saying "time will prove itself."

Some analysts said the sell-off reflected a scramble to shield portfolios from AI disruption as the rapid advances in the technology muddy valuations and cloud business prospects beyond the standard three-to-five year forecasts of companies.

Software is seen as especially vulnerable to disruption as tools such as Claude increasingly automate the routine tasks that have long underpinned the industry's pricing power.

"We are now in an environment where the sector isn't just guilty until proven innocent but is now being sentenced before trial," J.P. Morgan analyst Toby Ogg said.

"Our sense from investor discussions is that general appetite to step in remains generally low," he added, citing risks including competition from AI-native firms and clients building their own solutions in-house.

Britain's RELX REL.L and the Netherlands' Wolters Kluwer WLSNc.AS - major providers of analytics to the legal industry - dropped about 3% in morning trade before paring some losses, after plunging more than 14% and 12%, respectively, on Tuesday.

Shares of U.S. software and services firms .SPLRCIS were mixed in premarket trading after a near 13% slide over five straight sessions. Nasdaq-listed Thomson Reuters TRI.O, the parent company of Reuters News, was flat in light volume after Tuesday's record 16% slump on fears that AI could threaten its core legal division.

London Stock Exchange Group LSEG.L slid as much as 6.9%, extending Tuesday's near 13% drop.

Indian IT exporters .NIFTYIT also fell sharply, while Japanese software and systems developers NEC 6701.T, Nomura Research 4307.T and Fujitsu 6702.T sank between 8% and 11%, dragging the Nikkei .N225 benchmark index lower overnight.

ANTHROPIC THE SPARK BEHIND THE SELLOFF

One trigger for Tuesday's selloff was Anthropic's launch of plug-ins for its Claude Cowork agent on Friday, enabling automated tasks across legal, sales, marketing and data analysis.

Advertising stocks - viewed as among the most exposed in European media to AI - also stayed under pressure. France's Publicis PUBP.PA was last down 3.6% and Britain's WPP WPP.L lost 3%, both hitting new lows.

Shares in SAP SAPG.DE, Europe's largest software company, dropped more than 3%, a week after a disappointing cloud revenue forecast wiped around $40 billion off its market value.

With stellar gains in chipmaker Nvidia NVDA.O and so-called AI hyperscalers like Microsoft MSFT.O pushing U.S. stocks to record highs, regulators and policymakers - including the International Monetary Fund and the Bank of England - have warned of the risks of a potential bubble.

"All innovation means there is going to be disruption at some point, and we appear to be at a significant point in that journey for software and IT services companies," said Ben Barringer, head of technology research at Quilter Cheviot.

"There is a lot of uncertainty around exactly what AI agents can do, and as such, investors are choosing to shun the software market altogether, leaving nowhere to hide."

Salesforce CRM.O, CrowdStrike CRWD.O, Adobe ADBE.O each dipped about 0.2% in U.S. premarket trading, while Intuit INTU.O eased 0.6%. Atlassian Corp TEAM.O firmed 0.6%.