Software Selloff Worst in 25 Years as Nasdaq Software Drops 12%, Microsoft Off 8%, Salesforce Off 16%
Dan Ives warns the software sector is in its steepest 25-year selloff, with the Nasdaq Software Index down 12% this month and Microsoft and Salesforce shares off 8% and 16% respectively. He warns ongoing AI valuation corrections could pressure Alphabet’s cloud revenue growth.
1. Sector Selloff Overview
Dan Ives describes the current downturn as the steepest software selloff since 1998, noting a 12% drop in the Nasdaq Software Index this month. Investor enthusiasm for AI-driven growth has reversed sharply, driving valuation multiples across the sector to multi-year lows.
2. Impact on Major Cloud Stocks
Microsoft shares have declined about 8%, while Salesforce plunged nearly 16% following reports of slower AI adoption and tighter enterprise budgets. The rapid shift in spending priorities has widened the gap between growth expectations and current results.
3. Implications for Alphabet
Alphabet’s cloud unit and AI initiatives now face heightened investor scrutiny as sector valuations reset. Slower revenue growth projections for Google Cloud could lead to multiple contractions similar to those seen among peer cloud service providers.
4. Analyst Outlook
Ives anticipates further valuation adjustments as AI hype cools, warning that a protracted re-rating could pressure all major software and cloud leaders. He recommends watching upcoming earnings for signs of margin improvement and resumed enterprise IT spending.