Asian software stocks plunge after U.S. peers decline on fears over AI-led disruption
Engineer working with statistical analysis report. Digital technology and Artificial Intelligence (AI) concept.
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Wall Street’s fears about AI-driven disruptions affecting software companies spread to Asia on Wednesday; Tech stocks in the region followed overnight declines in their US counterparts.
In Asia, Japanese software companies led the declines in the region. TIS, a leading Japanese information technology services provider and systems integrator, fell more than 15%. Trend Micro lost over 8%, while NS Solutions fell nearly 7%.
Shares of IT companies in India, Asia’s software hub, fell and the Nifty IT index fell nearly 6%. Major IT companies such as Tata Consultancy Services and Infosys fell by 5.8% and 6.2% respectively.
Indian IT companies were among the top gainers on Tuesday following the announcement of the country’s trade deal with the US
Chinese software companies also experienced an increase in sales. Shares of China’s Kingdee International Software fell more than 15%, while cloud giant Tencent fell 3.27%. Alibaba lost over 1%, while Baidu lost over 2%.
“Artificial intelligence has transformed technology into an even more competitive sport,” said Ed Yardeni, president of Yardeni Research.
“Software stocks have been hit particularly hard as Anthropic has launched new tools for its Cowork product,” he said. “It’s too early to tell how useful the new tools will be, but investors have decided to reduce the valuation multiples of software stocks.”
Software firms once valued for their sticky subscriptions and reliable renewals are now under scrutiny as AI threatens to automate workflows, compress pricing and lower barriers to market entry for new competitors.
“For the industry to re-rate, companies need to show that AI can act as a growth enabler rather than a competitive threat; this may take longer than usual in the face of skeptical investors,” said Vey-Sern Ling, senior equity adviser at UBP.
Ling said UBP prefers infrastructure software where the risk of AI outages is low, as well as cybersecurity, where it has pricing power and where AI can potentially increase upsell opportunities.
Overnight in the US, ServiceNow shares lost nearly 7% of their value, bringing their year-to-date losses to 28%. Salesforce also fell nearly 7%, bringing its 2026 decline to almost 26%. TurboTax’s parent company, Intuit, is down nearly 11% and is now down more than 34% year-to-date. These moves contributed to the tech-heavy Nasdaq Composite losing 1.4% on Tuesday.
