Summary A sharp market selloff linked to AI disruption fears has wiped out nearly US$1 trillion in software stock value within days, as investors worry that artificial intelligence is starting to replace core business models , not just hype future growth. What’s Driving the Selloff Unlike past AI pullbacks driven by valuation concerns, this rout is fuelled by real-world evidence that AI tools may soon displace entire categories of software jobs and services . The trigger was Anthropic’s launch of an AI legal tool , which reignited fears that AI could rapidly move beyond coding into legal, sales, marketing, and finance functions . Key Market Impacts Nearly US$1 trillion wiped out from software stocks tracked by an iShares ETF in just seven days Software stocks at the epicentre , but selling has spread to hardware, services, lenders, and private equity Over US$17.7bn of US tech loans now trade at distresse...
Asian equities fell for a second straight session on Thursday as the global tech rout gathered pace, driven by concerns over stretched valuations, massive AI spending, and the risk of AI disrupting traditional software models.
What’s Driving the Move
The MSCI Asia-Pacific Index fell 0.7%, extending losses
South Korea’s Kospi Index dropped 2%, leading regional declines amid heavy AI exposure
Weak post-earnings reactions in Alphabet Inc, Qualcomm Inc, and Arm Holdings weighed on sentiment
The Nasdaq 100 suffered its worst two-day fall since October, breaking below its 100-day moving average — a technical red flag for some traders
Big Picture: Rotation Out of Tech
Investors are increasingly rotating away from technology, especially:
Software stocks, pressured by fears AI will compress pricing and erode moats
Chipmakers, where selling has been even more aggressive
A Bloomberg gauge of the “Magnificent Seven” fell 1.8%, and in just two days, hundreds of billions of dollars were wiped off tech-related stocks, bonds, and loans. Software ETFs alone have lost nearly US$1 trillion in value over the past week.
“Tech stocks may be too richly valued — but the flip side is that market strength is broadening beyond tech, which can signal healthier economic fundamentals,” said Kyle Rodda of Capital.com.
Markets at a Glance
Stocks
Japan Topix: +0.5%
Hang Seng: -0.8%
Shanghai Composite: +0.8%
S&P 500 futures: +0.3% (hinting selling pressure may be easing)
Commodities
Gold: -0.3% at ~US$4,949/oz
Oil (WTI): -1.4% to ~US$64.22, after Iran confirmed talks with the US
Crypto
Bitcoin: -1% below US$72,000
Ether: -0.2%
Why It Matters
This sell-off is unlike previous AI pullbacks in scale and speed. With:
AI capex ballooning
Valuations under scrutiny
Software business models facing disruption
investors are reassessing who the real AI winners will be — and who could be structurally challenged.
For now, volatility stays elevated, and tech leadership is no longer a given.
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