By Purvi Agarwal and Shashwat Chauhan
April 23 (Reuters) – U.S. technology stocks diverged further on Thursday as results from IBM and ServiceNow rekindled fears of AI‑driven disruption in software, while an upbeat outlook from Texas Instruments lifted some chipmakers, underscoring a widening winner-loser divide.
International Business Machines shares slumped 10.3% after reporting a slowdown in its first-quarter revenue growth, pressured by weakness in its software business, which includes its Red Hat cloud unit.
ServiceNow tumbled nearly 15% after flagging a hit to its first-quarter subscription revenue growth, citing delays in Middle East deals due to the ongoing Iran conflict.
Both companies reported first-quarter revenue and profit above analysts’ expectations, but the results failed to allay investor fears about the sector.
“While one might think that ServiceNow and other software stocks are already pricing in some deceleration amidst the severe selloff, investors are jittery due to AI disruption fears and volatility,” said analysts at J.P.Morgan.
The selloff rippled across the battered sector on Thursday, with Microsoft down 2.7%. Adobe fell 3%, CrowdStrike lost 3%, Intuit slid 6.2% and Datadog dropped 3.6%.
Investor concerns around AI disruption have been building since Anthropic launched new tools in February that automate tasks across areas such as marketing and data analytics, raising questions about the pressure such products could put on traditional software providers.
The selloff in software stands in contrast to strong gains in chip stocks this year, as investors have increasingly backed companies seen as direct beneficiaries of AI‑related infrastructure spending.
The iShares Expanded Tech-Software ETF has shed about 16% in 2026, while the iShares Semiconductor ETF has jumped over 43%.
Highlighting the divide trend, analog chipmaker Texas Instruments surged 10% on Thursday after it forecast second-quarter revenue and profit above estimates, on robust demand for its chip used in data centers.
Other analog chip suppliers, including ON Semiconductor, Microchip Technology, NXP Semiconductors and Analog Devices, also climbed, between 3.5% and 4.5% after Texas Instruments’ results.
The S&P 500 Software & Services index dropped over 4%, while the Philadelphia SE Semiconductor index gained about 2%, trading at a record high.
“This general bifurcation within tech and within AI is going to be something which is a major driver for markets in the years ahead,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
“The last couple of years, you could have held any large stock exposed to tech or AI, and you would have done quite well. Going forward, there’s going to be a lot bigger range of outcomes.”
(Reporting by Purvi Agarwal, Shashwat Chauhan and Medha Singh, additional reporting by Avinash P in Bengaluru; Editing by Shinjini Ganguli)
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