US equity markets, which began 2026 on a constructive note, extending the positive momentum established through the back half of last year, have lost momentum in February, with many tech stocks bleeding heavily on Wall Street.
The emergence of the latest and more advanced tools, especially from startups like Anthropic’s Claude Code, has led the Street to worry that these powerful innovations have the potential to disrupt traditional software business models.
This is triggering a widespread sell-off, not only in the US but also across key global markets, including India, erasing billions of dollars in investments and casting a cloud over the outlook for tech companies.
Fears have also now expanded to include potential impacts on other sectors such as financial services, transportation, and logistics.
Meanwhile, the ongoing AI race has pushed many US tech giants to announce billions in capex to build AI infrastructure, further deepening concerns, as these investments are coming at a time when returns have yet to match expectations. This is prompting investors to rotate from tech to consumer and other sectors, adding further pressure on technology stocks.
During Monday’s session, the Dow Jones closed lower by nearly 822 points, or about 1.7%. The tech-heavy Nasdaq Composite declined 1.1%, while the S&P 500 shed about 1% and slipped into the red for the year.
IBM down 24% in 2026; Microsoft extends losing streak to fourth straight month
Anthropic, which has been making headlines lately after announcing its latest AI tools, which the company claims can automate tasks across legal, sales, marketing, and data analysis, key areas for software firms, said on Monday that its Claude Code tool could be used to modernize a programming language running on IBM systems.
The announcement triggered a 13% crash in IBM shares, marking its largest single-day drop since October 2000. Yesterday’s crash has led IBM to fall 24.60% so far in 2026, erasing the majority of its 2025 gains.
In addition, a report from Citrini Research amplified concerns about companies vulnerable to the growing influence of artificial intelligence.
Apart from IBM, the other US-listed major- CrowdStrike Holdings- has also fallen 25% so far in 2026.
The company has issued its 2026 Global Threat Report, warning that artificial intelligence is dramatically accelerating cyberattacks while widening the range of corporate systems vulnerable to intrusion.
Microsoft shares, which are part of the Magnificent Seven group, have seen renewed selling this month, with the stock falling another 10.65% in February so far, extending its losing streak to a fourth straight month. On a year-to-date basis, the stock is down 20.50%.
Other stocks in the group, such as Amazon and Tesla, have each dropped 11%. Advanced Micro Devices has corrected 17% in under two months, while Nasdaq-listed Qualcomm has shed 18% during the same period.
Software stocks hit hard; ServiceNow, Salesforce tumble 34%
The AI scare trade has also spread beyond software to hit US insurance brokers, private credit firms, cybersecurity players, and even real estate services’ stocks.
S&P 500-listed stocks such as PayPal, Mastercard, American Express, and Visa are down 24%, 13.31%, 13%, and 12%, respectively, in 2026.
Software stocks such as ServiceNow and Salesforce have crashed 34% and 32.75%, respectively, in less than two months of 2026. Private credit stocks, including Blue Owl and TPG, have declined 30% and 34% amid fears that AI will disrupt the software industry.
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