"Trading volume in the iShares Expanded Tech-Software Sector ETF ( ) surged to near-record levels on Friday, with turnover approaching $11 billion, near the record $13.2 billion set on Feb. 6 and almost double the 2021 high of $5.8 billion. This panic selling has led to indiscriminate dumping of stocks - even those with solid fundamentals - as the sector lost over $1 trillion in market value in early February alone."
"Cloudflare shares declined 26% from their November highs, aligning with the broader software sector rout. The drop was exacerbated by a major network outage that month that disrupted access to platforms like X and ChatGPT, raising concerns about customer retention and operational reliability. Additionally, the stock faced pressure from stretched valuations, trading at 24 times current-year revenue prior to the selloff, as investors feared AI agents could commoditize edge computing services. Despite these headwinds, Cloudflare is poised to survive and thrive due to its integral role in supporting AI-driven workloads."
The software industry shifted from a must-own sector to one facing mass investor exits amid fears that artificial intelligence will upend traditional models. Trading in the iShares Expanded Tech-Software Sector ETF surged to near-record turnover, reflecting panic selling that erased over $1 trillion in market value. Investors indiscriminately dumped stocks, pressuring even fundamentally strong companies. Cloudflare shares fell 26% after a November network outage and valuation concerns, yet fourth-quarter results beat expectations with record annual contract values tied to AI, including a $130 million five-year deal and a $42.5 million annual contract. Cloudflare projected 2026 sales above analyst estimates, driven by increased demand for AI workloads. Durable firms such as Microsoft are positioned to benefit from AI rather than be displaced.
Read at 24/7 Wall St.
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