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Why software stocks are getting pummelled

economist.com

February 2, 2026

1 min read

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57/100

Summary

SAP projected a slight deceleration in its cloud-based software business for 2026, leading to a 15% drop in its share price. ServiceNow's share price fell by 13% despite reporting revenue growth in the latest quarter.

Key Takeaways

SAP's share price dropped by 15% after announcing a projected "slight deceleration" in its cloud-based software business for 2026.
ServiceNow's stock fell by 13% despite reporting faster-than-expected revenue growth in the latest quarter.
Salesforce and Workday experienced stock declines of 7% and 8%, respectively, without any recent news impacting their performance.

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Community Sentiment

Mixed

Positives

AI tools are enabling smaller teams to create unique, one-of-a-kind systems, which could revolutionize software development and reduce reliance on traditional SaaS companies.

Concerns

The perception that AI-generated code can replace the need for software engineers overlooks the ongoing complexities and costs associated with software development and maintenance.
There is a growing AI weariness among users, suggesting that reliance on AI tools may not be as favorable as initially thought, impacting major players in the market.