Software equities suffered broad losses on Thursday after quarterly reports from two industry bellwethers failed to reassure investors about near-term growth dynamics in the sector. ServiceNow shares fell 18%, moving toward what would be the largest single-day decline in the company's trading history. The company narrowly surpassed Wall Street revenue and earnings forecasts but warned that the U.S.-Iran war had acted as a headwind to quarterly subscription revenue.
IBM, which reported results that beat both earnings and revenue expectations, saw its stock decline 9.25% after management left guidance unchanged. The decision to maintain prior outlooks contributed to investor concern about momentum across established enterprise software vendors.
The selloff extended beyond those two names and into a range of widely held software and cloud stocks. Salesforce fell 9.4%, HubSpot dropped 9.3%, Adobe lost 7.4%, Intuit slid 7.6%, and Oracle declined about 6%. Workday's shares were down 9% on the session. The iShares Expanded Tech-Software ETF, which tracks a basket of software-related equities, fell about 5% on Thursday and is down roughly 18% year to date.
Market participants cited growing anxiety that artificial intelligence tools developed by firms such as Anthropic and OpenAI could erode the traditional cloud subscription model that has underpinned revenue predictability for many software companies. Those concerns have weighed on valuation support for legacy cloud providers and enterprise software firms.
Looking ahead, the earnings calendar features results from a set of major technology companies next week. Alphabet, Amazon, Meta, and Microsoft are scheduled to report on Wednesday, with Apple set to announce results on Thursday. Investors will be watching those reports closely for additional signals on demand, pricing dynamics, and management guidance.
Sector context
The moves on Thursday highlight the sensitivity of software valuations to both macro and company-specific developments, including geopolitically driven demand disruptions and cautious guidance from large incumbents. The market reaction illustrated how quickly investor sentiment can pivot when core assumptions about subscription durability and pricing power come into doubt.