MW Did a blog post just cause software stocks to lose more than $200 billion in market cap?

By Hannah Pedone

For investors to wade back into the software sector, they 'want and need to see the stocks stop trading down on new AI headlines,' one analyst says.

CrowdStrike was one of the worst-performing stocks in the S&P 500 on Monday.

Artificial-intelligence fears have dogged the software sector this year - and the pressure continued on Monday with renewed intensity.

There could be various factors behind the latest selloff, particularly a weekend post from Citrini Research, which imagined a future scenario where AI drives dramatic productivity boosts and mass underemployment.

"Every dollar saved on headcount flowed into AI capability that made the next round of job cuts possible," the Citrini team wrote, noting that the blog post was a "scenario, not a prediction."

In the Citrini scenario, the pressure on software stocks this quarter "was only the opening act" that would presage widespread job reductions at "every company with a white-collar cost structure" thanks to the benefits of AI.

Jefferies strategist Jeffrey Favuzza called the post "the latest cautious AI article to make the rounds."

The iShares Expanded Tech-Software Sector ETF $(IGV)$, a proxy for software stocks, fell 4.75% on Monday for its lowest close since Nov. 28, 2023 and its worst one-day decline since Feb. 5, when it fell 4.97%. Altogether, about $223.75 billion in market cap was wiped off from the ETF's components Monday, according to Dow Jones Market Data.

The weakest performers in the S&P 500 SPX were software stocks, with International Business Machines $(IBM)$, Datadog (DDOG), CrowdStrike Holdings (CRWD), and Zebra Technologies $(ZBRA)$ all off more than 9%.

Read more: There's another AI-doom post doing the rounds. In this one, the S&P 500 dives nearly 40%.

Software stocks have been vastly underperforming chip stocks, which are thought to be clearer beneficiaries of AI spending. And now software investors are highly sensitive to any hints of potential AI disruption to the existing software ecosystem, including Anthropic's recent string of product announcements.

UBS analyst Karl Keirstead said in a note that many enterprise-software stocks have been reacting to "seemingly any new product news out of Anthropic and OpenAI."

He added that investors are gearing up for an event on Tuesday where Anthropic will discuss Claude's capabilities in 2026 and potentially announce new features, which could further disrupt the software industry.

Even before that, Anthropic put out a post on Monday discussing how its Claude platform could help with COBOL modernization. That dragged down shares of IBM, which uses the COBOL programming language for data processing.

And software investors also seem to be digesting a product announcement from Anthropic on Friday. The AI company released a new feature, Claude Code Security, that can scan for security vulnerabilities, which hit cybersecurity stocks particularly hard on Friday and again on Monday, even as analysts said the market reaction seemed overdone.

"The only thing Claude is good at, writing software, means very little," Bernstein's Peter Weed said in a note to clients. "Writing cybersecurity software isn't and has never been the bottleneck."

D.A. Davidson managing director Gil Luria told MarketWatch in a Friday email that Anthropic was "mostly interested in driving more traffic to its APIs" than participating in "any specific software category."

Meanwhile, Jefferies analyst Brent Thill warned of pressure to other software stocks early Monday. He downgraded the shares of Workday (WDAY), Docusign (DOCU), Monday.com $(MNDY)$ and Freshworks (FRSH) to hold from buy, saying the companies are particularly at risk for AI disruption.

Thill said that he prefers software names including Intuit $(INTU)$, Procore Technologies (PCOR), Atlassian $(TEAM)$ and Salesforce (CRM). He said those companies rely on "durable models" and have stronger capabilities to adopt AI internally.

Mizuho analyst Jordan Klein said in a note that, based on his conversations, some investors want to buy "beaten-down" software stocks. But they are in no rush to do so, he said.

"They want and need to see the stocks stop trading down on new AI headlines," he said.

See also: 4 reasons cybersecurity stocks are primed for a breakout

-Hannah Pedone

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February 23, 2026 17:47 ET (22:47 GMT)

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