"Sentiment shifted in the stock market this week as investors began to question the value of corporate software and IT services in an age where artificial intelligence may be able to do the job in-house. But the market hasn't significantly dropped despite the sell-off, with analysts saying that investors are instead rotating through to other sectors. This might feel familiar to the more seasoned investor,"
"the software component of the S&P is down nearly 30% from its peak in October, and as such "you'd be forgiven for thinking markets would have seen a huge correction by now." "However, what we've actually seen is a significant rotation ... other sectors have taken up the baton from tech, such as energy, materials and consumer staples, meaning that the overall S&P 500 still only closed -2.6% beneath its record high from last month," Allen said."
Investor sentiment shifted as AI advancements prompted questions about the value of corporate software and IT services that could be replaced in-house. The shift intensified after Anthropic launched plug-ins for its Claude Cowork agent, which could streamline tasks in data analysis, legal, marketing, and sales. The immediate market fallout remained contained, with neither the S&P 500 nor the Nasdaq down more than about 2% and global markets relatively flat. The software segment has fallen sharply from its peak, but investors have rotated into sectors like energy, materials, and consumer staples, leaving the overall index near recent highs.
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