"As semiconductor stocks undergo another bout of severe volatility, Bank of America Global Research has issued a sharp rebuke of prevailing market sentiment, labeling fears driving the current tech-sector selloff as logically impossible. In a note released Tuesday, analysts argued that investors are currently pricing in what Fortune's Jim Edwards called a "freefall" based on beliefs that BofA considers "internally inconsistent.""
"That moment proved an "overblown selloff," and this moment just doesn't make logical sense, Arya argued. The SaaS selloff relies on two mutually exclusive scenarios BofA wrote: "AI capex deteriorating to the point of weak ROI and unsustainable growth, while simultaneously ... AI adoption will be so pervasive and productivity-enhancing that long-standing software workflows and business models become obsolete. Both outcomes cannot occur at once.""
"The market appears to be reacting, as Edwards noted, to Palantir CEO Alex Karp's typically outspoken argument on a Monday night earnings call. AI is now so good at writing and managing enterprise software that many software-as-a-service (SaaS) companies risk becoming irrelevant. The ensuing selloff wiped out $300 billion in market cap, with Microsoft, Salesforce, and ServiceNow taking significant hits."
Bank of America Global Research labeled fears behind the tech-sector selloff logically impossible and internally inconsistent. A famous quote about markets remaining irrational longer than investors can remain solvent was invoked to contrast recent software-led moves. Comments from a high-profile enterprise software CEO prompted a rapid sector selloff that erased about $300 billion in market capitalization, impacting Microsoft, Salesforce, and ServiceNow. The reaction was compared to an overblown January 2025 selloff tied to China’s DeepSeek. The current selloff hinges on two mutually exclusive AI scenarios: collapsing AI capex with weak ROI, and pervasive AI adoption that makes existing software workflows obsolete; both cannot occur together.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]