"AI Replacement Panic" intensifies! Global software stocks continue to fall. JP Morgan bluntly states: the industry is already in a "guilty until proven innocent" situation.

A market panic triggered by advancements in Artificial Intelligence (AI) technology is spreading globally, with the software sector taking the brunt of it and showing no signs of easing on Wednesday. According to JPMorgan, investors' pessimism towards this sector is continuing to escalate. JPMorgan analyst Toby Ogg bluntly stated, "The current environment for the software sector is not just presumed guilty, but has escalated to being judged prematurely." Over the past two weeks, Ogg has spoken with over 50 investors in Europe and the Americas and found that these investors have significantly reduced their holdings in software stocks over the past 12 to 18 months. In a client report, he pointed out that even after the recent sell-off, the willingness to buy software stocks in the market remains generally low. This statement comes after a collective plunge in the software, financial services, and asset management sectors on Tuesday - concerns about market competition were raised after AI startup Anthropic released a new AI automation tool, causing growing worries among investors that breakthroughs in generative AI technology could threaten the survival space of many companies. On Tuesday, a basket of American Software, Inc. Class A shares tracked by Goldman Sachs Group, Inc. plunged by 6%, marking the largest single-day drop since the sell-off triggered by tariffs in April this year. The financial services index dropped nearly 7%, the Nasdaq 100 index hit an intraday drop of 2.4%, ultimately closing at a 1.6% loss, with a total market value of approximately $285 billion evaporating in related sectors globally that day. The selling pressure quickly spread to Asian markets on Wednesday, while the downturn in European markets continued: after plummeting by 8% on Tuesday, a European business index facing the risk of AI disruption compiled by UBS Group AG dropped by another 2.1% on Wednesday, with shares of software behemoths like SAP (SAP.US) and Sage Group continuing to decline. In fact, the AI panic in the software industry has been brewing for months. In January, when Anthropic launched the Claude Cowork tool, it exacerbated investors' concerns about industry disruption; last week, Alphabet Inc. Class C(GOOGL.US) introduced Project Genie, which can create an immersive world through text or images, further dragging down game stocks. As of now, the S&P North American Software Index has fallen for three consecutive weeks, with a cumulative drop of 15% in January, marking the largest monthly decline since October 2008; the iShares Expanded Tech Software Sector ETF has also seen a six-day decline, with a 15% downturn in January, the worst monthly performance since 2008. Ogg wrote in the report, "Beating expectations is no longer sufficiently impressive for software companies." Companies must "unquestionably demonstrate that AI is a sustainable growth accelerant, rather than a long-term impediment to growth." As of the current earnings season, only 67% of software companies in the S&P 500 have exceeded revenue expectations, significantly lower than the overall 83% of the tech sector. Even tech giants like Microsoft Corporation (MSFT.US), who released strong financial results last week, saw their stock plummet by 10% in a single day due to concerns over slowing growth in cloud business and AI investments, making January its worst-performing month in over a decade. He noted that breaking out of this predicament is not easy for software companies because investor concerns involve multiple aspects. The most immediate concern is the seat-based pricing model - the application of AI tools can reduce the number of account logins needed for customers to complete their work, directly impacting the core pricing model of software companies. Furthermore, if software companies internally develop AI tools for product iterations, their existing revenue models will face transformation risks. Ogg also stated that the launch of any new products by top AI platforms, such as the legal AI tool introduced by Anthropic this time, will further exacerbate investors' concerns about the software sector.