US software stocks battered by renewed AI jitters

Cloudflare

09/04/2026 15:43

Updates

** Shares of U.S. software-related companies fall, with S&P 500 software and services index .SPLRCIS down 2.8%

** Palantir Technologies PLTR.O slips 7.3%, Autodesk ADSK.O drops 5.5% and ServiceNow NOW.N falls 5.2%

** The industry has been under pressure in recent months due to fears of disruption from AI models

** "AI has rapidly eroded traditional software moats, prompting a deliberate retreat from most software exposure and reinforcing the importance of diversification," says Michael Clarfeld, portfolio manager at ClearBridge Investments

** Earlier this week, Anthropic launched a new cybersecurity project, weighing on the software industry

** Cloud security firm Zscaler ZS.O also hits its lowest in nearly three years, last down 7.7% after brokerage firm BTIG downgrades to "neutral" from "buy"

** Says Netskope NTSK.O and Cloudflare NET.N have become more credible rivals

** ZS is trading at 31.4 times expected earnings over the next 12 months, hovering around its lowest levels ever, according to data compiled by LSEG

** YTD, the S&P 500 software and services index has lost 23.5% as of last close, compared with a 0.9% drop in the S&P 500 index .SPX

** Meanwhile, Wall Street's main indexes fall on concerns over the state of the U.S.-Iran ceasefire .N

 (Reporting by Niket Nishant in Bengaluru)

 ((Niket.Nishant@thomsonreuters.com))