Pressure on global software stocks intensified on Wednesday, as investors continued to reassess the long-term viability of business models increasingly exposed to rapid advances in artificial intelligence. The renewed selloff stretched across regions, pulling down European, Asian and emerging-market technology names for a second consecutive session.

European data analytics, professional services and software companies led declines, extending losses seen earlier in the week among peers worldwide. The weakness followed the launch of a new legal-focused artificial intelligence model from Anthropic, which sharpened investor concerns that AI tools could erode the value proposition of companies built around proprietary data, research and advisory services.

In morning European trading, Britain’s RELX and the Netherlands-based Wolters Kluwer—both major providers of legal and regulatory analytics—fell to fresh lows, each down close to 3%. London Stock Exchange Group shares slid another 6%, compounding Tuesday’s near-13% drop and underscoring the market’s growing unease around information-driven franchises.

The downturn was not confined to Europe. Indian IT exporters came under heavy selling pressure, while Japanese software and systems developers such as NEC, Nomura Research and Fujitsu fell between 7% and 11%. Those declines weighed on Japan’s Nikkei index, which retreated overnight.

The broad selloff is unfolding against a wider backdrop of anxiety that exuberance around artificial intelligence could be morphing into a technology bubble, with potential implications for financial stability. Analysts say the current reassessment goes beyond near-term earnings and reflects deeper questions about long-term growth assumptions.

JP Morgan analyst Toby Ogg noted that investors are now grappling with risks that extend well beyond traditional three-year forecast horizons. According to Ogg, sentiment has shifted decisively, with software companies facing skepticism not only from competition with AI-native firms, but also from clients increasingly able to build bespoke solutions in-house. As a result, appetite among investors to step in and buy the dip remains subdued.

One of the immediate catalysts for the latest wave of selling was Anthropic’s release of a legal plug-in for its Claude generative AI chatbot. The product highlighted how quickly AI is moving into high-value professional domains once considered relatively insulated from automation.

Advertising groups—often cited as among the most exposed segments of Europe’s media sector to AI disruption—also remained under pressure. France’s Publicis dropped nearly 5%, while Britain’s WPP slid more than 3%.

Meanwhile, shares in SAP, Europe’s largest software company, fell over 3%, extending losses after a weaker-than-expected cloud revenue outlook last week erased roughly $40 billion from its market value.

The contrast with parts of the U.S. market has been stark. Strong gains in chipmakers such as Nvidia and AI “hyperscalers” including Microsoft have helped propel U.S. equities to record highs. Yet as enthusiasm around AI spreads, policymakers and regulators—including the International Monetary Fund and the Bank of England—have cautioned that unchecked optimism could inflate a dangerous bubble.

Industry observers say the current volatility reflects a pivotal moment for the sector. While innovation has always brought disruption, uncertainty over the true capabilities of AI agents—and how quickly they can be deployed at scale—has left investors wary. For now, that uncertainty is prompting many to retreat from software stocks altogether, as markets search for clarity on who ultimately stands to win in the AI-driven reshaping of the industry.