Retail investors have been buying software and large-cap technology shares following last week’s sharp market decline, largely overlooking mounting worries that progress in artificial-intelligence models could threaten parts of the traditional software landscape.
Data compiled by Vanda Research show that net inflows into BlackRock’s iShares Expanded Tech-Software Sector exchange-traded fund reached a record $176 million on a one-month rolling basis as of Monday’s close. Vanda noted those flows were more than double the peak the firm recorded in late 2024.
The broader market turmoil was triggered in part when AI developer Anthropic introduced plug-ins for its Claude Cowork agent, an event that renewed investor concern about fast-moving AI developments potentially encroaching on the established businesses of conventional software providers.
Market measures capture the sector pain. The S&P 500 Software and Services index has fallen about 13% since late January and, according to the reporting period, lost close to $1 trillion in market value over the week through Thursday. In parallel, the iShares Tech-Software ETF has declined nearly 20% so far this year.
Against that backdrop, retail traders sought bargains among mega-cap names. Vanda Research reported Amazon.com recorded its largest single-day net retail buying since August 2024 on Friday, surpassing activity in AI chip maker Nvidia.
Despite the retail bids in parts of the tech complex, AI-related concerns have spread into other corners of markets. Insurers in the United States and Europe suffered declines this week, with analysts linking the losses to developments around insurance-related applications appearing inside ChatGPT.
What this means
- Retail demand can be strong even amid sectorwide selloffs, as shown by record inflows into an iShares tech-software ETF.
- Rapid advances and product launches in AI can trigger broader market reassessments of which companies are most exposed to disruption.
- Volatility driven by AI developments can extend beyond software to affect financial subsectors such as insurance.
Note on sources - Flow and trading observations in this report are based on data compiled and cited by Vanda Research and on market moves described in the reporting period.