Software Stock Sell-Off Deemed Overdone as AI Disruption Fears Grip Markets

The launch of Anthropic's Claude Cowork AI plugins has triggered a seismic sell-off in software stocks, with Thomson Reuters plummeting 18% in its worst single-day performance on record. European legal giants RELX and Wolters Kluwer followed suit, dropping 14% and 13% respectively, as the tech-heavy Nasdaq shed over 2% last week.

Market carnage extended across sectors, wiping $300 billion from software valuations in one brutal Tuesday session. Advertising firms Omnicom and Publicis cratered 11.2% and 9% as automation fears spread. Even cloud leaders Salesforce and ServiceNow weren't spared, both tumbling more than 9% weekly.

Wall Street strategists are pushing back against what they call an overreaction. "The notion that AI will replace software companies is the most illogical thing in the world," Nvidia CEO Jensen Huang tweeted, arguing established players will adapt. Cyclical and defensive sectors are now outperforming tech as investors recalibrate.