Software and data services stocks remain under pressure after the introduction of Anthropic Inc.’s legal automation tools reignited fears of AI disruption. Now, one fund manager says shorting software has become the latest expression of AI trading in the market. Software names, along with data services companies, financial information providers and publishers, saw their stock prices flip this week amid concerns that AI-driven disruption could upend such business models and drive customers away from such companies. “Companies that collate, aggregate and distribute software and data as a service are expected to become increasingly vulnerable to disruption from AI-driven tools,” Sharon Bell, senior European equities strategist at Goldman Sachs, said in a note Friday. A new plugin for Claude, Anthropic’s collaborative agent, provides AI tools across legal, sales, data analysis, and marketing tasks. Potentially comparable to existing software services. “Antropic’s announcement was just a wake-up call to a growing fear.” Software stocks tracked by the S&P 500 Software & Services Index fell 4% on Thursday, with the benchmark down almost 20% since the beginning of the year. Goldman Sachs’ own digital economy basket fell 10%. Salesforce, Thomson Reuters and LegalZoom were among the stocks that saw the steepest declines. CRM YTD Mountain Salesforce. “In this context, shorting software stocks appears to be emerging as a new expression of AI trading, with short interest in software as a sector at a two-year high,” said Mark Dowding, chief investment officer at RBC BlueBay Asset Management. Mr Dowding outlined his bearish stance, highlighting the potential for software unwinding to further impact broader capital markets, including private debt and bank lending. Dowding said in Friday’s market commentary that many private debt funds have “as much as 30% sector exposure in software”. He said many business development companies – closed-end investment vehicles operated by alternative investment managers that provide access to private credit assets – are currently trading at discounts of 20% to 30% to net asset value. Software is also being used heavily in traditional bank lending, he added. “This trend is interesting, as it shows that not everything emerging in the new era of AI will be bright and wonderful, and raises concerns about potential disruption down the road,” Dowding said. But Anish Acharya, general partner at venture capital firm a16z, said there’s still a lot of software to build. “It automates tasks, but it doesn’t automate the entire job,” Acharya said Friday on CNBC’s “Squawk Box Europe.” “Look at customer support…someone has to take the customer out to a steak dinner. Right now, AI isn’t doing that. So that person is building more relationships with customers and reducing day-to-day administrative tasks.”
