Engineer working with statistical analysis report. Digital technology and Artificial Intelligence (AI) concept.
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Wall Street’s fears around artificial intelligence-driven disruption affecting software companies made their way into Asia on Wednesday, with tech stocks in the region tracking declines overnight in U.S. peers.
Japanese software firms in Asia led declines in the region. TIS, a major Japanese information technology services provider and systems integrator, plunged over 15%. Trend Micro lost over 8%, while NS Solutions declined nearly 7%.
Shares of IT companies in India also dropped, with the the Nifty IT index down nearly 6%. Major IT firms Tata Consultancy Services and Infosys dropped 5.8% and 6.2%, respectively, while HCL was down 5.5%
Indian IT companies were among the top gainers on Tuesday, following the announcement of the country’s trade deal with the U.S.
Chinese software companies sold-off as well. Shares of China’s Kingdee International Software plunged more than 15%, while cloud major Tencent fell 3.27%. Alibaba lost over 1%, while Baidu was down over 2%.
“AI has turned technology into an even more competitive sport,” said Ed Yardeni, president of Yardeni Research.
“Software stocks were especially hard hit because Anthropic rolled out new tools for its Cowork product,” he said. “It’s too soon to tell how useful the new tools will be, but investors decided to cut the valuation multiples of software stocks.”
Software firms once valued for their sticky subscriptions and dependable renewals are now under scrutiny as AI threatens to automate workflows, squeeze pricing, and lower the barriers for new rivals to enter the market.
“For the sector to rerate, companies must show that AI can act as a growth enabler rather than just a competitive threat – this may take longer than usual in the face of skeptical investors,” said Vey-Sern Ling, senior equity advisor at UBP.
UBP prefers infrastructure software where the risk of AI disruption is low, as well as cybersecurity where there is pricing power and AI can potentially drive upsell opportunities, Ling said.
Overnight in the U.S., shares of ServiceNow tumbled nearly 7%, pushing its year-to-date losses to 28%. Salesforce also dropped about 7%, bringing its 2026 decline to almost 26%. Intuit, the TurboTax parent, fell nearly 11% and is now down more than 34% year to date. Those moves contributed to the tech-heavy Nasdaq Composite sliding 1.4% on Tuesday.
