On March 20, 2025, the logo of Salesforce.com was seen at the NVIDIA GPU Technology Conference in San Jose, California. NVIDIA's products have fueled massive investment in artificial intelligence, with the company stating that a new generation of AI models capable of generating more complex answers will only further increase market demand for computing infrastructure. Growing investor concerns that artificial intelligence could disrupt the business models of numerous companies triggered a flight from the software sector, leading to another sharp decline in U.S. software stocks on Thursday, extending this year's sustained and significant sell-off. The iShares Expanded Tech-Software Sector ETF (IGV) fell approximately 5% in early trading, marking its largest single-day drop since the market decline triggered by tariffs last April. The fund is now down about 21% from its recent peak, signaling an official entry into a bear market for the software industry and highlighting the rapid shift in sentiment for what was once one of Wall Street's most favored sectors. So far this month, the fund has fallen nearly 14%, on track for its worst monthly performance since October 2008, when it plummeted 23%. The iShares Expanded Tech-Software Sector ETF was last quoted at $91.24, down $5.82, a decrease of 6.00% (as of 11:43 AM Eastern Time). Even strong earnings from industry leaders like Salesforce.com failed to offset market fears about the AI threat, with the company's stock plunging over 11% on Thursday. The enterprise software maker reported fourth-quarter earnings that beat Wall Street expectations and issued guidance that was also better than market estimates. Analysts at Morgan Stanley stated in a research note on Salesforce's earnings: "The performance was acceptable but still fell short. Against a backdrop of rising investor skepticism towards legacy application vendors, steady growth that merely meets expectations is unlikely to change the negative market sentiment towards the sector." The overall pressure on the software sector intensified as investors questioned whether AI competitors and automation tools would erode demand for traditional software licensing and workflow products. While stable subscription revenue growth had previously supported the high valuations of software companies, investors are now re-evaluating the sector's valuation levels after assessing the possibility that AI could permanently reduce the industry's long-term revenue potential. Further exacerbating sector concerns was the performance of tech giant Microsoft. After the software behemoth reported a slowdown in cloud business growth for its fiscal second quarter, its stock fell about 10%, its largest single-day drop since March 2020, while its operating margin guidance for the fiscal third quarter also fell below market expectations. The rapid advancement of AI technology has amplified investor unease. Late last year, AI company Anthropic launched its Claude Opus 4.5 model, its third major model release in just two months. The company stated that this model excels in programming, computer operations, and assisting with complex enterprise tasks, with its core users including professional software developers and knowledge workers such as financial analysts, consultants, and accountants. During Thursday's earnings call, Salesforce CEO Bill McDermott attempted to allay investor concerns, arguing that the fear of AI replacing software vendors is unfounded. He stated, "Real value is unleashed when trillions of tokens move from the pilot phase directly into workflows that drive business decisions. Salesforce is the entry point for this transformation; as the semantic layer, we will drive the full adoption of AI in the enterprise." McDermott further added that because AI systems produce probabilistic outcomes, businesses will still need workflow software to ensure stable business results.