Software stocks traded lower on Friday amid mounting investor concerns about how rapidly advancing artificial intelligence (AI) could reshape the sector’s long-term earnings outlook, extending a broader AI-driven slump.
The latest pressure followed renewed attention on updates from AI company Anthropic, including reports that it has developed a highly capable frontier model described as too advanced for public release.
The model, referred to as Claude Mythos, has reportedly been shared with a limited group of around 50 organizations, including cybersecurity firms, for applications such as scanning and securing proprietary and open-source systems.
The development has intensified debate about the rise of AI agents with strong coding and systems capabilities, and whether they could displace parts of the software-as-a-service market by automating or replicating workflows traditionally delivered through paid software products.
Leading software stocks lower on Friday was Cloudflare (NYSE:NET), which was down 12.6%.
CrowdStrike Holdings Inc (NASDAQ:CRWD) was down 7.2%, SentinelOne (NYSE:S) fell 5.5%, Zscaler Inc. (NASDAQ:ZS) was down 5.1%, Okta Inc (NASDAQ:OKTA) was down 5%, and Intuit Inc (NASDAQ:INTU, XETRA:ITU) lost 4%.
Salesforce Inc (NYSE:CRM, XETRA:FOO) stock fell 3.2%, Adobe Inc (NASDAQ:ADBE) was down 2.3%, Atlassian (NASDAQ:TEAM) fell 2.1%, and SAP (NYSE:SAP) was down about 1%.
Broader pressure has been building throughout the year. Software equities have already faced sustained selling as investors reevaluate legacy business models in light of AI progress. The S&P 500 Software & Services index is down more than 26% in the year to date, trading at about $3,950.