Software stocks plunge on ServiceNow, IBM results, AI fears escalate
Sign outside ServiceNow headquarters in Santa Clara, California, USA on Thursday, September 4, 2025.
David Paul Morris | Bloomberg | Getty Images
Software stocks fell on Thursday after disappointing results ServiceNow And IBM’s It has raised fears that AI tools and services will disrupt their business.
ServiceNow shares had their worst day in history on Thursday, losing nearly 18%. The company narrowly beat Wall Street forecasts on Wednesday but said conflict in the Middle East had created a “headwind” for its quarterly subscription revenue. IBM lagged on earnings and revenue but maintained its guidance. The stock fell 8 percent.
sales force And hubspot fell 9% and 8% respectively. Adobe fell 7 percent Intuition And Seer both fell roughly 6%. Working day It fell 9% on Thursday and is down more than 45% this year. iShares Extended Technology Software ETF (IGV)The index, which tracks the industry overall, fell nearly 6% on Thursday and is down nearly 19% this year.
The industry has been defeated by concerns that artificial intelligence tools from companies such as Anthropic and OpenAI will replace the long-standing cloud subscription model.
Tech’s biggest companies will mostly report next week Alphabet, Amazon, Meta And Microsoft Results are scheduled to be announced on Wednesday, followed by Apple a day later.
These companies have fared much better than pureplay software vendors, mostly due to their central position in the AI boom. Microsoft, which has the most exposure to software, was the worst hit, falling 14% this year.
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