Anthropic's Claude Mythos AI model triggers sharp selloff in US software stocks

US software stocks fall as Anthropic's new AI model revives disruption fears

April 9 (Reuters) - U.S. software shares tumbled on Thursday after Anthropic held back the wide release of a powerful AI model over concerns it could expose hidden cybersecurity vulnerabilities, deepening investor fears about the threat to traditional software firms. Anthropic said earlier this week it would only allow a group of around 40 companies, including Microsoft and Google, access to its "Claude Mythos" model because it has already found thousands of vulnerabilities, including some in every major operating system ⁠and web browser. "If Mythos is that strong and that powerful and it's exposing these vulnerabilities that have been around for years, it just shows one, the weakness of the current software that's out there and two, that AI is still making incredible progress versus legacy software companies," said Michael O'Rourke, chief market strategist at JonesTrading. The S&P 500 Software and Services Index (.SPLRCIS), opens new tab is down nearly 26% this year, including Thursday's 3.1% drop, on worries ⁠that rapid progress in AI could hit SaaS (software-as-a-service) companies that sell subscription-based products to clients. Cybersecurity firms Cloudflare (NET.N), opens new tab, Okta (OKTA.O), opens new tab, CrowdStrike (CRWD.O), opens new tab and SentinelOne (S.N), opens new tab dropped between 4.7% and 7.7% in morning trade. Zscaler (ZS.O), opens new tab was among the biggest decliners on the S&P 500 (.SPX), opens new tab, ⁠down 8.6%. Brokerage BTIG downgraded the stock to "neutral" from "buy", citing concerns over demand and potential competition. "We're getting back to being concerned about the prior software-specific concerns stemming ⁠from AI and private credit that are coming back to the fore," said Steve Sosnick, chief market analyst at Interactive Brokers. Enterprise software developer ⁠Atlassian (TEAM.O), opens new tab, human resources software provider Workday (WDAY.O), opens new tab, Photoshop software maker Adobe (ADBE.O), opens new tab, enterprise cloud firm Salesforce (CRM.N), opens new tab and TurboTax-parent Intuit (INTU.O), opens new tab dropped between 3.7% and 6.8%. Reporting by Shashwat Chauhan in Bengaluru and Sinéad Carew; Editing by Sriraj Kalluvila Our Standards: The Thomson Reuters Trust Principles., opens new tab

US software stocks fall as Anthropic's new AI model revives disruption fears

U.S. software shares tumbled on Thursday after Anthropic held back the wide release of a powerful AI model over concerns it could expose hidden cybersecurity vulnerabilities, deepening investor fears about the threat to traditional software firms. U.S. software shares tumbled on Thursday after Anthropic held back the wide release of a powerful AI model over concerns it could expose hidden cybersecurity vulnerabilities, deepening investor fears about the threat to traditional software firms. Anthropic said earlier this week it would only allow a group of around ⁠40 ⁠companies, including Microsoft and Google, access to its "Claude Mythos" model because it has already found thousands of vulnerabilities, including some in every major operating system and web browser. "If Mythos is that strong and that powerful and it's exposing these vulnerabilities that have been around for years, it just shows one, the weakness ⁠of the current software that's out there and two, that AI is still making incredible progress versus legacy software ⁠companies," said Michael O'Rourke, chief market strategist at JonesTrading. The S&P 500 Software and Services Index is down nearly 26% this year, including Thursday's 3.1% drop, on worries that rapid progress in AI could hit SaaS (software-as-a-service) companies that sell subscription-based products to clients. Cybersecurity firms Cloudflare, Okta, CrowdStrike and SentinelOne dropped between 4.7% and 7.7% in morning trade. Zscaler was among the biggest decliners on the S&P 500, down 8.6%. Brokerage BTIG downgraded the stock to "neutral" from "buy", citing concerns over demand ⁠and potential competition. "We're getting back to being concerned about the prior software-specific concerns stemming from AI and private credit that are coming back to the fore," said Steve Sosnick, chief market analyst at Interactive Brokers. Enterprise software developer Atlassian, human resources software provider Workday, Photoshop software maker Adobe, enterprise cloud firm Salesforce and TurboTax-parent Intuit dropped between 3.7% and 6.8%.

US software stocks slump on renewed AI disruption jitters

April 9 (Reuters) - U.S. software shares tumbled on Thursday as fears over disruptions from advances in AI returned to the forefront following a recent update from Anthropic. Investors have dumped the sector's stocks this year on worries that AI tools that are capable of automating human tasks could pose an existential threat to the industry. The broader S&P 500 Software and Services Index is down 25.5% this year, including Thursday's decline of 2.6%. Optimism around a U.S.-Iran ceasefire that lifted broader risk appetite kept the concerns on the sidelines on Wednesday. But with the truce looking fragile, the worries are quickly reasserting themselves. "We're getting back to being concerned about the prior software-specific concerns stemming from AI and private credit that are coming back to the fore," said Steve Sosnick, chief market analyst at Interactive Brokers. Earlier this week, Anthropic launched a powerful AI model but held off on releasing it widely over concerns that it could expose hidden cybersecurity vulnerabilities. Only a group of around 40 tech heavyweights, including Microsoft and Google, would have access to Anthropic's "Claude Mythos" model. "If Mythos is that strong and that powerful and it's exposing these vulnerabilities that have been around for years, it just shows one, the weakness of the current software that's out there and two, that AI is still making incredible progress versus legacy software companies," said Michael O'Rourke, chief market strategist at JonesTrading. GROWTH UNDER SIEGE The moves underscore how one of Wall Street's favorite trades has turned into a headache as AI upends the software industry. "Whether AI spells the end of the software business is an open question. Given the unprecedented dynamism and speed of AI, we do not pretend to have the answers," said Michael Clarfeld, portfolio manager at ClearBridge Investments. Cybersecurity firms Cloudflare, Okta, CrowdStrike and SentinelOne dropped between 4.9% and 6.5%. Zscaler was among the biggest decliners on the S&P 500 on Thursday, down 8.8% after brokerage BTIG downgraded the stock to "neutral" from "buy", citing concerns over demand and potential competition. The company is trading at 31.4 times expected earnings over the next 12 months -- near the bottom of its historical range -- compared to a multiple of 55.4 at the beginning of the year, according to LSEG data. Enterprise software developer Atlassian, human resources software provider Workday, Photoshop maker Adobe, enterprise cloud firm Salesforce and TurboTax-parent Intuit dropped between 3.7% and 6.8%. The anxiety is also creeping into private credit as investors scrutinize lending to technology companies amid doubts over future growth. Carlyle Group shares dipped 1.5% as the company's flagship private-credit interval fund became the latest to be hit by a wave of redemptions. In Europe, SAP Global, Capgemini and Temenos fell between 3% and 7%. (Reporting by Shashwat Chauhan and Niket Nishant in Bengaluru and Sinéad Carew in New York; Editing by Sriraj Kalluvila)