Silent war between software firms and those developing AI. Who loses and who wins on the stock market

The wave of AI innovation has become a market driver, as each new model can quickly change companies' profit estimates. From one week to the next, a new sector suffers depreciations following the launch of new AI models that would endanger the practices and, by implication, the profits of the traditional operators in that field.

Record investments in AI in recent years appear to be paying off. Archive photo

A broad market analysis shows that software stocks are suffering a major decline on the US stock market after the launch of a new, more efficient model of Anthropic, which has sparked fears that a vast set of software tools will be replaced by AI agents.

The S&P 500 Software & Services index fell more than 4% on Thursday, leading to a market-wide decline. However, the Nvidia CEO's comments that the idea of ​​a decline in the software industry and its replacement by AI would be the most illogical thing in the world appeared to be heeded on Friday, following a rally in the US stock market.

2026, the year of the battle between AI and software

“The battle between the two camps will continue, with solid arguments on both sides”, XTB analysts believe, pointing out that some venture funds have positioned themselves in the direction of declines, with short sales of $24 billion until last Wednesday, but the relatively high level of valuations on the American stock market can also be taken into account.

Over time, a reset in growth expectations for some software services companies, from customer relationship management software to image editing, document or spreadsheet tools, is expected to have an impact on the stock market. The impact will go beyond some very pronounced initial responses, points out XTB analyst Claudiu Cazacu.

According to him, sometimes investors' reactions can be intensely emotional. Unity, Roblox, TakeTwo, along with other developers from several regions of the world fell after the publication of an AI-generated video with a Google tool that would indicate the ease of creating games using the new technologies. However, it is still a long way from a sequence limited in size to the engine, the logic behind traditional games, or the brand image and developer community built over time.

Furthermore, rather than leading to the demise of entire firms, some teams may be able to integrate the technology profitably. It is true, however, that increased competition would initially erode profit margins. In the period after the launch of Google's tools until last Friday, just over a week, Unity fell by 34.6%, Roblox by 12.3%, TakeTwo Interactive by 18.3%.

Investors returned to better sentiment on Monday, with Unity shares up 9.7%, Roblox up 10.6%, TakeTwo up 4.8%. Volatility allowed for constructive positioning by those who felt the emotional reaction was overblown.

Law and insurance under pressure

Another area prone to transformation is outside the digital realm, though poised to use AI agents: legal services. Competition between law firms will be defined by the technology used, said the founder of Legora, a company in intense competition with Harvey for AI technology used in the legal field. The winner will take 90%, in his view, and defining simple services as the standard product would force massive consolidation in the law firm sector on both sides of the Atlantic.

In the US, insurers suffered steep declines after the launch of a price comparison tool integrated into ChatGPT was announced. The good news for consumers, however, did not favor the shareholders of insurance companies either, with the S&P sector index falling by 3.9% on Monday, analysts point out.

For the UK, the London insurance segment is a fundamental component of the financial district and even more important now in the post-Brexit architecture. France and Germany also have important shares of the insurance sector in the economy.

Record investments in AI: From growth catalyst to question marks

Record investments in AI in recent years appear to be paying off, with tech giants posting solid profits in the last quarter. “But investors are increasingly questioning their plans to spend hundreds of billions of dollars before there is clear evidence that AI can generate the promised returns, fearing that we could witness an 'AI bubble' similar to the 'Dot.com' one that burst in 2000. The market today is trying to understand how AI is changing companies and society, and how these huge investments will help tech giants to move forward”believes eToro analyst Bogdan Maioreanu.

So far, this quarterly reporting season is looking very good for the tech sector. According to LSEG data, profits in this sector increased by an average of 31%, revenues by 20%, and 95% of reporting companies offered positive surprises. In the group of “7 Magnificent“, revenues are booming (except for Tesla), profits are beating expectations, and demand is holding steady. But the sector is showing signs of weakness due to concerns about the use of AI and the scale of capital spending, which shows that investors are trying to get back to economic fundamentals to understand what's going on, trying to determine whether the return on massive AI investments justifies the expense.

Apple posted its best quarter in history, Meta revenue grew nearly 24%, Alphabet accelerated in the cloud sector, Microsoft remains a pillar of enterprise software, beating Wall Street expectations, while Amazon positions itself as the “infrastructure” for AI. Even Tesla manages to surprise with the shift from the automotive industry to AI and robotics, but it is still in the promise phase. However, something has changed in the market. We now have shares that are beating estimates but falling. Ambitious guidelines are punished. Record capital expenditure is not celebrated as an investment but is seen as a risk to future earnings. It's not a change of heart about AI. It is a change in the evaluation criteria.

“Artificial intelligence (AI) has been considered the catalyst for market growth in the past two years. It is now a capital expenditure accelerator. In 2026, Meta, Alphabet and Amazon alone are headed for a combined infrastructure spending of nearly $520 billion, compared to $239 billion in 2025, a +77% increase. AI development is currently moving from software capabilities to the power of infrastructure, data centers, servers, networks, chips and energy. The market is not rejecting AI and companies actively working in this field, it is rejecting the idea that AI is automatically a boost to companies' margins in the short term“, points out Maioreanu.

According to him, investors are looking not only at the dollar value of AI investments, but also at the quality of those investments. A dollar invested in a segment that accelerates and increases margins looks positive, a growth investment. A dollar invested for a “build capacity” anticipating an application that is still in its infancy may seem like a risky move.

Alphabet gains ground, Microsoft loses

Looking at the tech giants, the eToro analyst points out that Alphabet, with an accelerating Cloud and growing margins, is a rare sign at a time when expenses tend to affect the visibility of other results. The company's shares are currently up just 3% year-to-date, but are up 61% over the past 6 months. On the other hand, the analyst says, there is Microsoft, penalized not for demand, which remains very strong, but for costs that appear immediately, while revenues are constrained by capacity constraints, data centers, chips and build times. Microsoft shares have lost more than 14% since the start of the year and nearly 21% over the past six months.

Tesla remains a special case because it is not selling the market quarterly results, but is trying to sell a paradigm shift, a technological leap in robotics and autonomy. To date, the company's share price has lost nearly 7% year-to-date. Finally, Amazon and Meta remind us of the unwritten rule of 2026: only those with balance sheets strong enough to fund years of investment before demanding a return on investment can sit at the AI ​​table. Meta is forecasting capital expenditures of 135 billion, while Amazon is eyeing more than 200 billion. These impressive sums have been treated differently by investors, with Meta shares up nearly 3% year-to-date, while Amazon has fallen nearly 10% over the same period.