April 23 (Reuters) – U.S. software stocks fell in premarket trading on Thursday, following quarterly results from IBM and ServiceNow that reignited fears about \u200cAI-driven disruption across the sector.<\/p>\n
International Business Machines said its revenue growth \u200cslowed in the first quarter, pressured by weakness in its software business, anchored by its Red \u200bHat cloud unit. Growth in the segment slowed to 11.3%, sending the Big Blue’s shares 7.4% lower.<\/p>\n
ServiceNow also flagged a hit to its first-quarter subscription revenue service, citing delays in Middle East deals due to the ongoing Iran conflict.<\/p>\n
Although both companies reported \u200cfirst-quarter revenue and profit \u2060above analysts’ expectations, the results failed to allay investor fears about the sector.<\/p>\n
“The challenge is shifting from simply having an AI \u2060story to proving that it can support products, workflows, and returns,” said analysts at UBS Global Wealth Management.<\/p>\n
“Widespread disruption in software is more likely a long-tail scenario than \u200ban immediate \u200bone, especially for enterprise-facing and mission-critical providers \u200bwith sticky customer relationships.”<\/p>\n
Investor concerns \u200caround AI disruption have been building since Anthropic launched new tools in February that automated tasks across domains, including marketing and data analytics, raising questions about the pressure such products could put on traditional software businesses.<\/p>\n