The downturn was spearheaded by steep drops in Fortinet and ServiceNow, whose latest quarterly updates prompted dozens of brokerages to slash their price targets. Pressure quickly spread to other industry leaders, including Salesforce, Atlassian, and Palo Alto Networks. Market unease deepened as Alphabet's Google debuted Gemini 4 Carbon, its latest frontier AI model targeting advanced coding and cybersecurity systems.
Key points
The S&P 500 Software & Services Index has climbed just 6 per cent this year, lagging well…: The S&P 500 Software & Services Index has climbed just 6 per cent this year, lagging well behind the broader market.
At least 14 brokerages trimmed their valuation targets for Fortinet, while a minimum of 1…: At least 14 brokerages trimmed their valuation targets for Fortinet, while a minimum of 10 brokerages reduced price targets for ServiceNow.
The enterprise software pullback spread widely to impact other major firms, dragging down…: The enterprise software pullback spread widely to impact other major firms, dragging down shares of Salesforce, Palo Alto Networks, Atlassian, and Zscaler.
Sources checked by our analysis pipeline: 1
Oct 29 : Shares of software companies tumbled in premarket trading on Thursday following disappointing results from Fortinet and ServiceNow, deepening worries about AI disruption that has plagued the sector.
Software companies have been under intense scrutiny this year as investors weigh the likelihood of newer AI models disrupting traditional business models.
The S&P 500 Software & Services Index has managed a 6 per cent year-to-date rise, just about half the gains recorded by the S&P 500.
Fortinet was down 26 per cent and was the top decliner on Wall Street's benchmark index.
The company raised its annual results expectations. However, analysts pointed to decelerating revenue growth in its services unit, reflecting a high bar set for the company, whose stock has rallied 119 per cent this year.
At least fourteen brokerages cut their price targets on the stock, including Piper Sandler, Jefferies and Deutsche Bank.
"We remain on the sidelines as we await evidence that new areas such as protecting east-west traffic from agentic adoption, large firewall AI data center-related deals, and (operation technology), can truly continue firewall momentum,"…
Wall Street analysts are growing increasingly cautious about Google's core revenue engine amid shifting consumer engagement patterns. Financial institutions are concerned that commercial returns are failing to keep pace with the sheer volume of search activity. This trend threatens to compress margins as infrastructure expenses climb without an equivalent rise in ad conversions.
Market participants responded favorably to a dual catalyst of stronger-than-expected financial results and a formal rating adjustment. BNP Paribas improved its stance on the firm as reported earnings surpassed prior targets. This combination spurred renewed buying interest, driving the equity higher in recent trading sessions.
Investor sentiment turned negative across major exchanges following the tech giant's latest financial update. Market participants are growing increasingly anxious about the massive capital expenditures required to develop advanced technology, leading to an immediate pullback during the morning session.