Analysts: AI-fueled tech sell-off is overblown, driven by fear not fundamentals

Bank of America and William Blair analysts say recent losses in tech, led by software, are overblown as the Nasdaq Composite fell about 2% on Wednesday amid AI disruption worries and some poorly received earnings. The sell-off accelerated after Anthropic introduced a plugin for its Claude Cowork AI agent that was described as more automatic in completing clerical tasks, prompting William Blair to call it the latest 'boogeyman in software.' The firm said disruption will most affect point solutions and vendors that cannot or will not adapt, and does not justify broad-based selling.

Bank of America likened the move to the January 2025 DeepSeek-driven decline, which erased about $1 trillion in market value in one day but ultimately proved unfounded as major indexes recovered and finished 2025 higher, and noted global cloud capital spending rose 69% in 2025.

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