AI Disruption Triggers Sell-Off: S&P Tech-Software ETF IGV Plummets as 164 Stocks Lose $611B

AI-driven disruption sent shockwaves through equities as startups like Anthropic released tools expected to automate tasks across legal, data and financial services. The fallout was immediate: Expedia Group, Salesforce and London Stock Exchange Group among others were sharply sold, with a broad swath of software, financial services and asset management stocks losing $611 billion in market value last week. The iShares Expanded Tech-Software Sector ETF (IGV) tumbled 12% in four sessions before rebounding late on Feb 3. Goldman Sachs data shows software is the most net-sold group this year, with hedge fund net exposure to the sector at a record low of less than 3%. Meanwhile, a software-profit multiple index hit a record low of 21x, and Salesforce is trading at 14x forward earnings versus a 46x average over the past decade. Despite the panic, profit growth for software and services companies in the S&P 500 is forecast to rise 19% in 2026, up from 16% earlier. Analysts warn the disruption is accelerating, with some companies likely to see permanent changes to their business models.