The angst of Wall Street regarding artificial intelligence-driven disruption of software firms found its way into Asia on Wednesday as tech stocks in Asia followed overnight drops in U.S. counterparts.
Declines in the region were dominated by Japanese software companies in Asia. TIS, a giant Japanese information technology service provider and systems integrator, fell more than 15 percent. Trend Micro fell by over 8 percent, and NS Solutions fell by almost 7 percent.
Shares of IT firms in India slipped, with the Nifty IT index plunging nearly 6 percent. Major IT companies Tata Consultancy Services and Infosys fell 5.8 percent and 6.2 percent, and HCL fell 5.5 percent.
The Indian IT firms were also some of the best gainers on Tuesday after the country announced that it had a trade agreement with the U.S.
Therefore, Chinese software firms were also sold off. The shares of China’s Kingdee International Software are down more than 15 percent, while the cloud major Tencent dropped 3.27 percent. Alibaba lost over 1 percent, while Baidu plunged over 2 percent.
Ed Yardeni, president of Yardeni Research, said, “AI has turned technology into an even more competitive sport.”
He added, “Software stocks were especially hard hit because Anthropic rolled out new tools for its Cowork product. 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 companies, once valued for their sticky subscriptions and dependable renewals, are now under scrutiny as AI threatens to automate workflows, tighten pricing, and reduce the barriers for new competitors to enter the market.
Vey-Sern Ling, senior equity advisor at UBP, stated, “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.”
Ling reported that the UBP favors infrastructure software in which the risk of AI disruption is minimal and cybersecurity in which the pricing power is high, and AI could potentially lead to upsell opportunities.
In the U.S., ServiceNow shares fell by almost 7 percent overnight, bringing its losses to 28 percent in the year-to-date. Salesforce also declined by nearly 7 percent, which put its 2026 forecast at nearly 26 percent.
Intuit, the TurboTax parent, dropped nearly 11 percent and is now down more than 34 percent year to date. The Nasdaq Composite, which is largely technology-based, fell 1.4 percent on Tuesday due to such moves.
