Adding to the uncertainty are fears of slower hiring, workforce rationalization and automation-driven efficiencies at tech companies. This has led to warnings about future housing demand, especially in the mid-to-premium residential segments, where IT professionals make up a significant portion of buyers.
The latest weakness comes from Anthropic, the company behind the Claude chatbot, after it said its product is capable of automating several legal functions, including contract reviews, non-disclosure agreement triage, compliance workflows, legal document preparation and standardized responses.
This development has further strengthened the already bearish sentiment around software stocks, as investors become increasingly concerned about intensifying competition and margin pressure from the widespread adoption of AI.
At the heart of the market reaction is growing concern that AI could fundamentally reshape the competitive landscape for software and IT services companies, eroding both profitability and market position.
Industries once considered relatively safe from AI disruption – including legal services, data analytics and customer support – now find themselves firmly in the crosshairs. If AI can automate these functions, the vast IT services industry built around it could face existential challenges. Last week, global brokerage Jefferies was among the first to call the market reaction a “SaaSpocalypse,” noting a rapid shift in sentiment “from ‘AI helping these companies’ to ‘AI replacing these companies,” Jeffrey Favuzza of Jefferies’ equity trading desk described the mood as outright panic. “Trading is very much a ‘get me out’ style of selling,” he said, according to Bloomberg.
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