The software sector is facing its steepest market decline since the 2008 financial crisis, driven not by a banking collapse but by fears over artificial intelligence. “AI anxiety is reshaping the software sector’s landscape. What started as a US sell-off has become a reckoning for Europe’s tech giants,” analysts said.

In the United States, the sector fell 14.5% in January, marking its worst monthly performance since October 2008. The decline accelerated in early February, dropping another 10% in less than two weeks. Investor concerns have centered on the possibility that AI tools could not only enhance existing software products but also erode subscription-based business models that have supported growth for over a decade.

High-profile companies have experienced dramatic reversals. Unity Software, Rapid7, and Braze have each lost more than half their market value since the start of the year. Even major players such as Palantir, Salesforce, Intuit, and ServiceNow have fallen around 30% year-to-date. The sell-off was intensified by Anthropic’s January launch of new enterprise plugins for its Claude AI assistant, prompting investors to question whether traditional software platforms remain essential.

The tremors in the U.S. have spread to Europe, where the software sector, valued at roughly €300 billion, is concentrated among a few key companies. Germany’s SAP, the region’s largest software firm with a market capitalisation of about €200 billion, has dropped roughly 20% year-to-date and 40% since its February 2025 peak. The company is heading for its ninth straight month of decline, a streak unseen in over three decades.

France’s Dassault Systèmes, a leader in 3D design software, has fallen 25% since January, approaching its fifth consecutive month of losses, the longest since 2016. British software provider Sage Group has also dropped about 25% year-to-date, including a 17% slide in February, marking its weakest monthly performance since 2002. RELX, a UK information and analytics company, fell 17% in a single session earlier this month, its steepest daily decline since 1988.

Mid-sized European firms have faced even sharper declines. Sidetrade, a French AI-based order-to-cash platform, has lost nearly 50% of its value this year. Sweden’s Lime Technologies, Denmark’s cBrain, and Norway’s LINK Mobility Group are down between 32% and 38%, reflecting the sector’s sensitivity to investor sentiment.

Experts are divided on the outlook. Nvidia CEO Jensen Huang dismissed fears that AI will replace software entirely, calling it “the most illogical thing in the world,” and suggesting AI will enhance existing systems. Wedbush Securities and JP Morgan strategists have argued that the market is pricing in worst-case disruption scenarios unlikely to materialise soon.

Yet Goldman Sachs strategist Ben Snider warned of “long-term downside risk,” comparing the sector to industries that underestimated structural change, such as newspapers and tobacco. Veteran investor Ed Yardeni described the shift from “AI-phoria to AI-phobia,” suggesting valuations may now reflect potential slowdowns rather than immediate collapse.

The software sector is not disappearing, but AI is forcing investors to rethink how value is created. Companies that adapt effectively may emerge stronger, while others could see margins and pricing power challenged. The industry’s competitive landscape is likely to look very different in the years ahead.

“Google’s parent company Alphabet is offering a rare 100-year bond in sterling markets after its original $20bn (€16.8bn) US dollar bond sale was massively oversubscribed. This makes it the first tech company to sell a century bond since Motorola in 1997.”

Alphabet is moving ahead with plans to issue a highly unusual 100-year bond in the sterling market, following overwhelming investor interest in its recent US dollar bond sale. The technology giant intends to raise about £1 billion (€1.15 billion) through the century bond, marking a notable return of ultra-long corporate debt in the technology sector.

Reports indicate the sterling offering has already attracted orders approaching ten times the amount Alphabet plans to raise. The move follows a major bond sale earlier this week in which Alphabet raised $20 billion (€16.8 billion) in US dollar-denominated debt. The original target of $15 billion (€12.6 billion) was increased after investor demand exceeded $100 billion (€84 billion).

The company is preparing to issue debt across several currencies as it seeks to broaden its funding sources. Alongside the sterling century bond, Alphabet is reportedly exploring a bond sale in Swiss francs. The planned offering would mark the first time a technology company has issued a 100-year bond in nearly three decades. Motorola last sold a century bond in 1997.

Alphabet’s US dollar debt package was divided into seven segments, with the longest maturity extending to 40 years and scheduled to mature in 2066. Pricing for the bonds is expected to be slightly tighter than initially projected, reflecting strong investor interest. The greatest demand was recorded for shorter-term bonds, with three-year securities priced at only 0.27 percent above US Treasury yields.

The bond sales are being managed by JPMorgan, Goldman Sachs and Bank of America, which are coordinating the company’s multi-currency fundraising effort.

Industry analysts say issuing debt in multiple currencies allows Alphabet to reach a broader pool of investors while managing borrowing costs. Sterling markets currently offer relatively lower interest rates compared with US dollar markets, which could help make the century bond more attractive and cost-efficient for the company.

Alphabet’s borrowing activity comes as technology companies increase spending on artificial intelligence infrastructure. The company recently announced plans to invest more than $185 billion (€155 billion) in capital expenditure tied largely to artificial intelligence development and expansion of cloud computing services.

To support this spending, Alphabet’s long-term debt has grown sharply, reaching $46.5 billion (€39 billion) in 2025. Despite this increase, the company maintains strong liquidity, holding more than $125 billion in cash reserves.

Other major technology firms have also raised large amounts of debt to finance AI investments. Oracle recently secured $25 billion (€21 billion) in a bond sale that attracted record investor demand. Financial analysts estimate technology hyperscalers could borrow around $400 billion (€335.7 billion) in 2026, more than double the total borrowed in 2025. The increase could push overall issuance of high-grade US corporate bonds to record levels this year.