This looks more like a positioning and narrative shock than the start of a structural bear phase for software.
What is really driving the selloff
The catalyst was not earnings deterioration but perceived disruption risk. The announcement by Anthropic reframed Al from “software tailwind” to “software margin threat”, particularly for legal tech, workflow automation, fintech tooling, and parts of asset management. That narrative shift hit a sector that was already crowded, richly valued, and sensitive to duration.
Once selling began, ETF and factor unwinds amplified the move. Six consecutive down sessions, coupled with sharp index-level drawdowns, suggest forced de-risking rather than fresh fundamental discovery.
Does software continue to dip
Near term, volatility can persist. When thematic leadership breaks, markets typically overshoot before stabilising. However, a broad-based collapse is unlikely unless we see confirmation through guidance cuts, slower bookings, or enterprise spending pullbacks. None of that has meaningfully surfaced yet.
Buy-the-dip or wait
This is not a blind buy-the-dip moment. It is a selective accumulation phase.
More resilient:
Mission-critical, high-switching-cost platforms
Companies monetising Al rather than being displaced by it
Firms with strong free cash flow and pricing power
More vulnerable:
Workflow tools with shallow moats
Al-adjacent names priced on narrative rather than earnings
Fintech and asset managers exposed to market beta and fee compression
How to view the panic selling
This looks like a sentiment reset, not a secular top. Panic selling often creates opportunity, but only after expectations fully compress. Let volatility do its work. When quality software trades at reasonable multiples again, the risk-reward improves materially.
In short: expect more noise, not a wholesale abandonment of software. The Al story is rotating, not ending.
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