Signage outside the ServiceNow headquarters in Santa Clara, California, United States, Thursday, September 4, 2025.
David Paul Morris | Bloomberg | Getty Images
Software stocks fell Thursday following disappointing results from ServiceNow And IBM add to fears that artificial intelligence tools and services will disrupt their businesses.
ServiceNow shares fell 17% on Thursday, on pace for their worst day ever. The company narrowly beat Wall Street estimates on Wednesday, but said conflict in the Middle East created a “headwind” for quarterly subscription revenue. IBM beat on profits and revenues, but maintained its forecasts. The stock fell 9%.
Sales force And Hubspot each fell about 9%. Adobe And Intuition were down about 7%, and Oracle fell about 5%. working day slipped 10% on Thursday and more than 45% this year. THE iShares Expanded Technology Software ETF (IGV)which typically tracks the sector, fell about 5% on Thursday and is down about 18% this year.
The industry has come under fire over concerns that AI tools from companies like Anthropic and OpenAI will replace the long-standing cloud subscription model.
Read more CNBC tech newsThe biggest tech companies will mostly report results next week, with Alphabet, Amazon, Meta And Microsoft is expected to release the results on Wednesday, followed by Apple a day later.
These companies have fared much better than purely niche software companies, largely because of their central position in the AI boom. Microsoft, which has the most exposure to software, has been hit hardest, down 14% this year.
WATCH: ServiceNow and IBM fall on their first quarter results