{"id":2785,"date":"2026-01-29T16:35:37","date_gmt":"2026-01-29T16:35:37","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/software-stocks-enter-bear-market-on-ai-disruption-fear-with-servicenow-plunging-11-thursday\/"},"modified":"2026-01-29T16:35:37","modified_gmt":"2026-01-29T16:35:37","slug":"software-stocks-enter-bear-market-on-ai-disruption-fear-with-servicenow-plunging-11-thursday","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/software-stocks-enter-bear-market-on-ai-disruption-fear-with-servicenow-plunging-11-thursday\/","title":{"rendered":"Software stocks enter bear market on AI disruption fear with ServiceNow plunging 11% Thursday"},"content":{"rendered":"\n<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108119578\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>ServiceNow Inc. signage during the Nvidia GPU Technology Conference in San Jose, California, on March 20, 2025.<\/p>\n<p>David Paul Morris | Bloomberg | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Software stocks on Thursday slid deeper into an ongoing intense sell-off  this year as investors recoiled from the sector on growing fears that artificial intelligence could upend many firms&#8217; business models. <\/p>\n<p>The <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-1\">iShares Expanded Tech-Software Sector ETF<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> (IGV) dropped about 5% in morning trading, on pace for its biggest one-day decline since last April during the tariff-triggered downturn. The fund is now down about 21% from its recent high, pushing the software industry into bear-market territory and underscoring how quickly sentiment has turned against one of Wall Street&#8217;s former favorite industries.<\/p>\n<p>Month to date, IGV is down almost 14%, on pace for worst month since October 2008\u00a0when the fund fell 23%.<\/p>\n<\/div>\n<div>\n<div class=\"Collapsible-proliveCollapsableContainer\" role=\"button\" tabindex=\"0\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"256\" height=\"256\" viewbox=\"0 0 256 256\" aria-labelledby=\"title desc\" role=\"img\" focusable=\"false\" preserveaspectratio=\"xMinYMin\" class=\"Collapsible-stockChartIcon\"><title>Stock Chart Icon<\/title><desc>Stock chart icon<\/desc><g transform=\"translate(1.4065934065934016 1.4065934065934016) scale(2.81 2.81)\"><path d=\"M 87.994 0 H 69.342 c -1.787 0 -2.682 2.16 -1.418 3.424 l 5.795 5.795 l -33.82 33.82 L 28.056 31.196 l -3.174 -3.174 c -1.074 -1.074 -2.815 -1.074 -3.889 0 L 0.805 48.209 c -1.074 1.074 -1.074 2.815 0 3.889 l 3.174 3.174 c 1.074 1.074 2.815 1.074 3.889 0 l 15.069 -15.069 l 14.994 14.994 c 1.074 1.074 2.815 1.074 3.889 0 l 1.614 -1.614 c 0.083 -0.066 0.17 -0.125 0.247 -0.202 l 37.1 -37.1 l 5.795 5.795 C 87.84 23.34 90 22.445 90 20.658 V 2.006 C 90 0.898 89.102 0 87.994 0 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 65.626 37.8 v 49.45 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 23.518 L 65.626 37.8 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 47.115 56.312 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 42.03 L 47.115 56.312 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 39.876 60.503 c -1.937 0 -3.757 -0.754 -5.127 -2.124 l -6.146 -6.145 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 59.844 C 41.952 60.271 40.933 60.503 39.876 60.503 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 22.937 46.567 L 11.051 58.453 c -0.298 0.298 -0.621 0.562 -0.959 0.8 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 48.004 L 22.937 46.567 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><\/g><\/svg><\/p>\n<div class=\"Collapsible-proLivePlayerCloseOrExpand\"><\/div>\n<\/div>\n<p><iframe title=\"The iShares Expanded Tech-Software Sector ETF over one year\" src=\"https:\/\/www.cnbc.com\/appchart?symbol=IGV&amp;range=1Y&amp;type=mountain&amp;embedded=true&amp;$DEVICE$=undefined\" height=\"460\" scrolling=\"no\" loading=\"lazy\" style=\"border:0;width:100%\"><\/iframe><\/p>\n<p>The iShares Expanded Tech-Software Sector ETF over one year<\/p>\n<\/div>\n<div>\n<div class=\"Collapsible-proliveCollapsableContainer\" role=\"button\" tabindex=\"0\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"256\" height=\"256\" viewbox=\"0 0 256 256\" aria-labelledby=\"title desc\" role=\"img\" focusable=\"false\" preserveaspectratio=\"xMinYMin\" class=\"Collapsible-stockChartIcon\"><title>Stock Chart Icon<\/title><desc>Stock chart icon<\/desc><g transform=\"translate(1.4065934065934016 1.4065934065934016) scale(2.81 2.81)\"><path d=\"M 87.994 0 H 69.342 c -1.787 0 -2.682 2.16 -1.418 3.424 l 5.795 5.795 l -33.82 33.82 L 28.056 31.196 l -3.174 -3.174 c -1.074 -1.074 -2.815 -1.074 -3.889 0 L 0.805 48.209 c -1.074 1.074 -1.074 2.815 0 3.889 l 3.174 3.174 c 1.074 1.074 2.815 1.074 3.889 0 l 15.069 -15.069 l 14.994 14.994 c 1.074 1.074 2.815 1.074 3.889 0 l 1.614 -1.614 c 0.083 -0.066 0.17 -0.125 0.247 -0.202 l 37.1 -37.1 l 5.795 5.795 C 87.84 23.34 90 22.445 90 20.658 V 2.006 C 90 0.898 89.102 0 87.994 0 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 65.626 37.8 v 49.45 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 23.518 L 65.626 37.8 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 47.115 56.312 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 42.03 L 47.115 56.312 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 39.876 60.503 c -1.937 0 -3.757 -0.754 -5.127 -2.124 l -6.146 -6.145 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 59.844 C 41.952 60.271 40.933 60.503 39.876 60.503 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><path d=\"M 22.937 46.567 L 11.051 58.453 c -0.298 0.298 -0.621 0.562 -0.959 0.8 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 48.004 L 22.937 46.567 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"\/><\/g><\/svg><\/p>\n<div class=\"Collapsible-proLivePlayerCloseOrExpand\"><img decoding=\"async\" src=\"https:\/\/static-redesign.cnbcfm.com\/dist\/a54b41835a8b60db28c2.svg\" class=\"Collapsible-dismissButton\" alt=\"hide content\"\/><\/div>\n<\/div>\n<p><iframe title=\"ServiceNow 5 days\" src=\"https:\/\/www.cnbc.com\/appchart?symbol=NOW&amp;range=5D&amp;type=mountain&amp;embedded=true&amp;$DEVICE$=undefined\" height=\"460\" scrolling=\"no\" loading=\"lazy\" style=\"border:0;width:100%\"><\/iframe><\/p>\n<p>ServiceNow 5 days<\/p>\n<\/div>\n<div class=\"group\">\n<p>&#8220;Good, but not good enough,&#8221; Morgan Stanley analysts said in a note of ServiceNow report. &#8220;In an environment of heightened investor skepticism on incumbent application vendors, stable growth, in line with expectations, likely falls short of shifting the narrative.&#8221;<\/p>\n<p>The pressure has deepened across the sector as investors question whether AI competitors and automation tools could erode demand for traditional software licenses and workflows. Valuations once justified by steady subscription growth are being recast as investors assess the possibility that AI could permanently shrink long-term revenue potential.<\/p>\n<\/div>\n<div class=\"group\">\n<p>The selloff spilled into megacap tech as well. <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-4\">Microsoft<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> slid about 10% after reporting a slowdown in cloud growth for the fiscal second quarter, on track for its steepest one-day drop since March 2020. The software giant also issued softer-than-expected guidance on operating margin for the fiscal third quarter.<\/p>\n<p>Investor unease has been amplified by the rapid pace of AI development itself. Anthropic released Claude Opus 4.5 late last year, its third major model launch in just two months. The company said the model excels at coding, operating computers and assisting with complex enterprise tasks, with ideal users including professional software developers and knowledge workers such as financial analysts, consultants and accountants.<\/p>\n<p>ServiceNow Chief Executive Officer Bill McDermott sought to counter investor fears on the company&#8217;s earnings call Thursday, saying concerns that AI will displace software vendors are misplaced. <\/p>\n<p>&#8220;The real payoff comes when trillions of tokens move beyond pilots to be embedded directly into the workflows where business decisions are made,&#8221; McDermott said. &#8220;ServiceNow is the gateway to this shift, serving as the semantic layer that makes AI ubiquitous in the enterprise.&#8221;<\/p>\n<p>He added that because AI systems are probabilistic, companies still need workflow software to ensure consistent business outcomes.<\/p>\n<p><em>\u2014 With assistance from CNBC&#8217;s Samantha Subin.<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>ServiceNow Inc. signage during the Nvidia GPU Technology Conference in San Jose, California, on March 20, 2025. David Paul Morris | Bloomberg | Getty Images Software stocks on Thursday slid deeper into an ongoing intense sell-off this year as investors recoiled from the sector on growing fears that artificial intelligence could upend many firms&#8217; business [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2786,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[2709,2710,2708,2711,326,2713,2712,2707,191,981],"class_list":["post-2785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-bear","tag-disruption","tag-enter","tag-fear","tag-market","tag-plunging","tag-servicenow","tag-software","tag-stocks","tag-thursday"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=2785"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/2786"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=2785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=2785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=2785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}