Compass Investments

– Catenaa Thursday, January 29, 2026 – U.S. software developer stocks declined Thursday amid SAP’s subdued cloud outlook and ServiceNow’s post-report collapse, fueling investors’ worries about pressure from artificial intelligence firms.

ServiceNow shares sagged more than 11.5% , although full-year subscription revenue beat Wall Street analysts’ expectations. German giant SAP fell nearly 16.4% as analysts pointed out that its cloud order book and revenue forecast for 2026 were below expectations.

“The bad mood in the software sector persists, complemented by a seemingly paradoxical and vicious cycle of low multiples with stable, if not growing, investor demand, J.P.Morgan analysts said in a research note. This double blow led to a decline in the share price of Salesforce by more than 7.2% , and the securities of Adobe, the creator of Photoshop, and cloud-oriented company Datadog sagged, respectively, more than 3.8% and 8% . These quotes were among the leaders of the fall on the Nasdaq index.

“All of these software brands are performing dismally as the market, in our view, is pricing in a worst-case scenario where software becomes irrelevant because AI is undermining the entire industry, Adam Turnquist, lead technical strategist at LPL Financial, told Reuters.

Software product prices have weakened markedly in recent weeks as investors reassess the extent to which the AI boom will affect the current profit margins and pricing power of traditional enterprise software versus infrastructure players such as data center operators and chip makers.