AI Panic Hits Asia: Software Stocks Crash After Wall Street Rout

Asian technology stocks tumbled on Wednesday after a sharp overnight decline in U.S. software shares, as concerns grew that artificial intelligence could disrupt traditional software business models. The negative sentiment quickly crossed borders, dragging down software companies across major Asian markets.

Japanese Software Stocks Lead the Regional Fall

Japan saw the steepest losses, with software firms bearing the brunt of the sell-off. TIS, a leading IT services and systems integration company, plunged over 15%. Cybersecurity firm Trend Micro dropped more than 8%, while NS Solutions slipped nearly 7%, reflecting heightened investor anxiety around AI-driven competition.

Indian IT Stocks Slide After Tuesday’s Rally

Indian IT stocks also came under heavy pressure, with the Nifty IT index falling close to 6%. Tata Consultancy Services declined 5.8%, Infosys slipped 6.2%, and HCL Tech lost 5.5%. The fall came a day after Indian IT companies had rallied on optimism surrounding India’s newly announced trade deal with the United States.

Chinese Software Firms Face Heavy Selling

China’s software and internet majors were not spared either. Kingdee International Software saw its shares plunge more than 15%. Cloud giant Tencent fell 3.27%, Alibaba dropped over 1%, and Baidu slipped more than 2%, as investors reassessed valuations amid rising AI uncertainty.

AI Innovation Triggers Valuation Concerns

Market experts believe fresh AI developments have intensified fears around software profitability. “AI has turned technology into an even more competitive sport,” said Ed Yardeni, President of Yardeni Research. He noted that software stocks were hit particularly hard after Anthropic unveiled new tools for its Cowork product, prompting investors to cut valuation multiples.

Traditional Software Models Under Pressure

Once prized for stable subscriptions and predictable renewals, software companies are now under closer scrutiny. AI-driven automation threatens to streamline workflows, compress pricing, and lower entry barriers for new competitors, challenging the sector’s long-held growth assumptions.

What It Will Take for a Software Stock Revival

“For the sector to rerate, companies must prove that AI is a growth enabler rather than just a competitive threat,” said Vey-Sern Ling, Senior Equity Advisor at UBP. He added that regaining investor confidence may take time amid ongoing skepticism.

Safer Bets Within the Software Space

UBP currently favors infrastructure software, where AI disruption risks are relatively low, and cybersecurity firms, which still enjoy pricing power. In these segments, AI could even help boost revenues through premium offerings and upselling opportunities.

U.S. Tech Rout Adds to Global Pressure

The Asian sell-off followed a rough session on Wall Street. ServiceNow shares fell nearly 7%, extending its year-to-date losses to 28%. Salesforce dropped around 7%, pushing its 2026 decline close to 26%. Intuit sank nearly 11% and is now down over 34% this year. These losses dragged the Nasdaq Composite down 1.4% on Tuesday.