Software stocks, including ServiceNow, continue to plummet as investors fear AI may disrupt business models. The IGV ETF fell 5%, now down 21% from its high, putting the software industry in bear-market territory. Morgan Stanley analysts say ServiceNow’s growth is not enough to change investor skepticism towards traditional software vendors.

Investors worry AI competitors and automation could reduce demand for software licenses. Valuations based on subscription growth are now questioned as AI threatens long-term revenue potential. Even megacap tech like Microsoft is affected, with a 10% drop after a slowdown in cloud growth and soft guidance on operating margin for the next quarter.

Read more at CNBC: Software stocks enter bear market on AI disruption fear with ServiceNow plunging 11% Thursday