US tech stocks fell sharply on Tuesday as fresh concerns about the impact of AI on software businesses swept across Wall Street. 

The tech-heavy Nasdaq Composite shed 1.4 per cent, while the broader S&P 500 was down 0.8 per cent. Markets were dragged lower by large declines for a host of analytics groups following AI company Anthropic’s launch of productivity tools for its Claude Cowork platform that can help automate legal work. 

Analytics groups Gartner and S&P Global dropped 21 per cent and 11 per cent, respectively, while Intuit and Equifax both declined more than 10 per cent. Moody’s fell 9 per cent and FactSet lost 11 per cent.

A JPMorgan index tracking US software stocks slid 7 per cent, taking its loss this year to 18 per cent.

“Software is getting a shellacking,” said Charlie McElligott at Nomura.

“The irony, the hilarity, is that everyone was breathing a big sigh of relief on the AI hyperscaler trade after Oracle got funding yesterday,” he added, referring to the software group’s several-times-subscribed $25bn bond offering on Monday. “The second-order impacts of the AI rollout are being felt today.”

Index heavyweights were caught up in Tuesday’s sell-off, with chipmaker Nvidia down 2.8 per cent and Microsoft losing 2.9 per cent to extend its recent decline. Oracle dropped 3.4 per cent.

“All the software players are clients of the hyperscalers” such as Amazon, Microsoft and Alphabet, said Mike O’Rourke at Jones Trading. “If the guys who are supposed to buy the computing power are being disrupted, that’s bad for the hyperscalers, too.

“If legal can be disrupted [by Anthropic’s new tool] then so can consulting and financial services,” he added.

AMD, an AI chip rival to Nvidia, fell about 8 per cent after market on Tuesday despite the company beating Wall Street estimates both on last quarter’s revenue and its $9.8bn sales forecast for the current quarter. 

Chief executive Lisa Su said the company was “entering 2026 with strong momentum” led by “rapid scaling” of its data centre business. A deal with OpenAI last year established the start-up as the first customer for AMD’s upcoming MI400 AI chips, which compete with Nvidia’s. 

But investors are fretting about skyrocketing memory chip costs driven by data centre demand eating into the margins of large US tech companies such as AMD, Intel and Apple.

Many investors have in recent months trimmed their positions in software stocks as concerns over the risks of AI to the sector have mounted, leaving them easily spooked by new developments, according to Jeremy Abelson at Irving Investors.

“Positioning is at multiyear lows and risks are at multiyear highs,” Abelson said. “I’ve covered software for a long time and I’ve rarely seen a day where almost everything is off by 4 to 15 per cent.”

Private equity groups, many of which have piled into software in recent years, also tumbled. Ares Management dropped 10 per cent, as did KKR, and Apollo fell 4.8 per cent.

Others pinned the scale of Tuesday’s moves on herd mentality, with Steven Grey, chief investment officer at Grey Value Management, pointing to the “impossible-to-predict impact of AI” shaking up stocks.

Shares of software companies listed in Asia also slumped. In Australia, shares of Xero and WiseTech fell 13.1 per cent and 8.3 per cent, respectively, while the Hong Kong shares of China’s Kingsoft Corporation slipped 5.7 per cent. In India, IT services firms including Infosys and Tata Consultancy Services sold off in early trading.

The moves were reminiscent of the sharp market sell-off in January last year that was triggered by the advances of Chinese AI start-up DeepSeek, whose emergence wiped hundreds of billions of dollars off the value of major US tech stocks.

Sectors including transport and consumer staples, which are viewed as relatively immune to AI disruption, advanced on Tuesday as software slipped. 

In London, information provider Relx took a hit of more than £6bn.

Relx dropped 14.4 per cent on Tuesday, reversing the fortunes of one of the best-performing stocks in recent years and a company widely regarded as one of the UK’s brightest hopes for AI success. Relx owns the leading legal information and analytics platform LexisNexis.

Shares of rival publishers and analytics groups that support legal services also dropped, with Wolters Kluwer down 12.7 per cent on Euronext in Amsterdam.

Anthropic’s new legal tool — which promises to automate contract reviews, compliance workflows and legal briefings — was among those launched to automate specific tasks within a company that also covers marketing and customer support.

Shares in European advertising companies declined on Tuesday, with Publicis off 9 per cent and WPP down almost 12 per cent. In the US, Omnicom fell more than 11 per cent.

Traditional media companies such as Relx have reinvented themselves as data-led analytics businesses, with hopes that they will be among Europe’s AI winners given their access to proprietary data and research.

Relx was in the UK’s top 10 most valuable companies last year, just above Barclays, but recent investor fears over US tech companies bringing in AI tools aimed specifically at corporate clients have begun to erode its share price.

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LSEG has a deal with Anthropic to license some of its financial markets data to Claude.

The group also derives substantial earnings from Workspace, a data and news competitor to Bloomberg’s ubiquitous terminals. Workspace has more than 350,000 users among portfolio managers, investment banks and wealth advisers.

Shares in LSEG lost 12.8 per cent, its worst one-day performance in five years.

Additional reporting by Michael Acton