US software stocks battered by renewed AI jitters

Shares of U.S. software-related companies fall, with S&P 500 software and services index .SPLRCIS down 2.8%

Palantir Technologies PLTR.O slips 7.3%, Autodesk ADSK.O drops 5.5% and ServiceNow NOW.N falls 5.2%

The industry has been under pressure in recent months due to fears of disruption from AI models

"AI has rapidly eroded traditional software moats, prompting a deliberate retreat from most software exposure and reinforcing the importance of diversification," says Michael Clarfeld, portfolio manager at ClearBridge Investments

Earlier this week, Anthropic launched a new cybersecurity project, weighing on the software industry

Cloud security firm Zscaler ZS.O also hits its lowest in nearly three years, last down 7.7% after brokerage firm BTIG downgrades to "neutral" from "buy"

Says Netskope NTSK.O and Cloudflare NET.N have become more credible rivals

ZS is trading at 31.4 times expected earnings over the next 12 months, hovering around its lowest levels ever, according to data compiled by LSEG

*YTD, the S&P 500 software and services index has lost 23.5% as of last close, compared with a 0.9% drop in the S&P 500 index .SPX

Meanwhile, Wall Street's main indexes fall on concerns over the state of the U.S.-Iran ceasefire .N