Key Updates on AI and Software Stocks
As of early February 2023, the enterprise software sector has seen a significant decline, with the iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) down 16%. Major companies like Microsoft, ServiceNow, and SAP reported double-digit losses following earnings reports, despite showing solid growth. The downturn is largely attributed to fears that AI advancements could disrupt traditional software, allowing companies to create equivalent tools in-house.
In stark contrast, AI startups OpenAI and Anthropic are raising substantial capital, with Anthropic increasing its fundraising target to $20 billion and Amazon considering a $50 billion investment in OpenAI. This juxtaposition suggests confidence in AI’s long-term potential, even as software stocks struggle. The current trends indicate potential for the semiconductor sector, which stands to benefit from increased demand for AI infrastructure.
