Concerns Over Software and Services Stocks Linked to AI Might Be Exaggerated
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy TRI?
Source: Barron's
Software and Services Stocks Resilience: Contrary to expectations, software and services stocks are not facing demise due to the rise of artificial intelligence.
AI's Impact on the Market: The introduction of AI technologies has not negatively impacted the performance of these stocks as previously feared.
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Analyst Views on TRI
Wall Street analysts forecast TRI stock price to rise
12 Analyst Rating
9 Buy
3 Hold
0 Sell
Strong Buy
Current: 85.160
Low
160.00
Averages
192.65
High
258.00
Current: 85.160
Low
160.00
Averages
192.65
High
258.00
About TRI
Thomson Reuters Corporation is a content and technology company. The Legal Professionals segment serves law firms and governments with research and workflow products powered by technologies, including generative artificial intelligence (AI). The Corporates segment serves corporations ranging from small businesses to multinational organizations with a full suite of content-driven products, powered by technologies, including generative AI. The Tax & Accounting Professionals segment serves tax, audit and accounting firms with research and workflow products powered by technologies, including generative AI. The Reuters News segment supplies business, financial and global news and data to media organizations, professionals and news consumers through Reuters News Agency, Reuters.com, Reuters Events, Thomson Reuters products and to financial firms exclusively via LSEG products. The Global Print segment provides legal and tax information and commercial printing services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Concerns Over Software and Services Stocks Linked to AI Might Be Exaggerated
Software and Services Stocks Resilience: Contrary to expectations, software and services stocks are not facing demise due to the rise of artificial intelligence.
AI's Impact on the Market: The introduction of AI technologies has not negatively impacted the performance of these stocks as previously feared.
See More
ClearBridge Canadian Equity Strategy Underperforms in Q4 2025
- Underperformance: The ClearBridge Canadian Equity Strategy underperformed the S&P/TSX Composite TRI in Q4 2025, primarily due to negative security selection and weak sector allocation, leading to decreased investor confidence that may affect future capital inflows.
- New Investment: During Q4 2025, the fund initiated a new position in Thomson Reuters (NASDAQ:TRI), indicating confidence in the company's growth potential despite the overall unfavorable market conditions.
- Exits from Investments: In the same quarter, the fund exited its positions in Nutrien (NYSE:NTR) and Saputo (SAPIF), reflecting a cautious outlook on these companies, possibly based on market changes or fundamental considerations.
- Market Dynamics: Thomson Reuters' stock multiple is unlikely to see significant movement until the AI debate is resolved, indicating the market's sensitivity to tech stocks, which may influence investor decisions and the fund's overall performance.
See More
THOMSON REUTERS CORP: BOFA GLOBAL RESEARCH RESUMES COVERAGE WITH NEUTRAL RATING AND TARGET PRICE OF C$135
Company Overview: Thomson Reuters Corporation is a global research firm that provides information and insights across various sectors.
Rating Update: The company has received a neutral rating from BofA Global Research, indicating a stable outlook.
Price Target: The objective price set for Thomson Reuters shares is $135.
Market Implications: The neutral rating and price target suggest cautious optimism regarding the company's future performance in the market.
See More
Anthropic's New Tools Cause Market Turmoil
- Market Reaction: Following the launch of Anthropic's Claude Cowork and its industry-specific plugins, the market experienced panic, with stocks of Salesforce, Intuit, and Atlassian dropping by 27.9%, 33%, and 41.6% respectively, reflecting investor fears that AI tools could replace traditional SaaS platforms.
- Alphabet's Stock Decline: Alphabet's shares fell over 6% in the week after the Claude Cowork announcement, raising concerns among investors about its competitive position in AI, despite not directly offering industry-specific software, which affected market confidence.
- Competitive Pressure from Gemini 3: Google's Gemini 3 LLM update launched in November significantly enhanced its AI capabilities, attracting a surge of paid subscribers, leading investors to worry that Claude Cowork might further poach these users, increasing market uncertainty.
- Investor Buying Opportunity: Despite market volatility, renowned investors like Warren Buffett and Cathie Wood actively increased their stakes in Alphabet during the stock's decline, investing $21.6 million and $15 million respectively, indicating confidence in Alphabet's long-term value and potentially providing a buying opportunity for other investors.
See More
Alphabet Shares Decline Due to Claude Cowork Launch
- Stock Price Decline: Alphabet's shares fell over 6% following the launch of Claude Cowork, which, while not directly impacting Google's core business, raised concerns about competition with Google's Gemini 3 AI tool, leading to negative investor sentiment.
- Investor Activity: Notable investor Cathie Wood took advantage of the dip by purchasing $21.6 million in Alphabet shares through her Ark Invest funds on February 5, indicating confidence in the company's future potential despite current market challenges.
- Industry Impact: The rollout of Claude Cowork negatively affected several business software companies, with Salesforce, Intuit, and Atlassian experiencing stock declines of 27.9%, 33%, and 41.6%, respectively, reflecting market fears that AI tools could replace traditional SaaS platforms.
- Competitive Pressure: Despite Google's advancements with Gemini 3 in the AI space, investors remain concerned that Claude Cowork could lure away paid subscribers from Gemini, potentially undermining Google's competitive position in the AI market.
See More
AI Trade Sentiment Reverses, Four Major Industries Hit Hard
- Software Sector Hit: The iShares Tech-Expanded Software Sector ETF (NYSE:IGV) has plummeted nearly 20% year-to-date, making it the worst-performing industry, as fears mount that AI tools could disintermediate traditional software providers, causing forward P/E ratios for application software to drop from 35.3 to 23.7 and systems software from 35.5 to 23.3, reflecting market concerns over future earnings durability.
- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
- Insurance Broker Anxiety: Insurance brokers are facing disruption due to the integration of AI-driven tools, with the S&P Insurance Brokers industry index down 4% year-to-date; while the insurance sector remains relationship-driven, there are concerns that AI could erode commissions, impacting brokers' income stability.
- Asset Management Damage: Alternative asset managers are indirectly affected by significant exposure to private software companies, with many large firms down double digits year-to-date, as declining public software valuations raise concerns about their private portfolios, shrinking exit opportunities.
See More
Concerns Over Software and Services Stocks Linked to AI Might Be Exaggerated
Software and Services Stocks Resilience: Contrary to expectations, software and services stocks are not facing demise due to the rise of artificial intelligence.
AI's Impact on the Market: The introduction of AI technologies has not negatively impacted the performance of these stocks as previously feared.
See More
ClearBridge Canadian Equity Strategy Underperforms in Q4 2025
- Underperformance: The ClearBridge Canadian Equity Strategy underperformed the S&P/TSX Composite TRI in Q4 2025, primarily due to negative security selection and weak sector allocation, leading to decreased investor confidence that may affect future capital inflows.
- New Investment: During Q4 2025, the fund initiated a new position in Thomson Reuters (NASDAQ:TRI), indicating confidence in the company's growth potential despite the overall unfavorable market conditions.
- Exits from Investments: In the same quarter, the fund exited its positions in Nutrien (NYSE:NTR) and Saputo (SAPIF), reflecting a cautious outlook on these companies, possibly based on market changes or fundamental considerations.
- Market Dynamics: Thomson Reuters' stock multiple is unlikely to see significant movement until the AI debate is resolved, indicating the market's sensitivity to tech stocks, which may influence investor decisions and the fund's overall performance.
See More
THOMSON REUTERS CORP: BOFA GLOBAL RESEARCH RESUMES COVERAGE WITH NEUTRAL RATING AND TARGET PRICE OF C$135
Company Overview: Thomson Reuters Corporation is a global research firm that provides information and insights across various sectors.
Rating Update: The company has received a neutral rating from BofA Global Research, indicating a stable outlook.
Price Target: The objective price set for Thomson Reuters shares is $135.
Market Implications: The neutral rating and price target suggest cautious optimism regarding the company's future performance in the market.
See More
Anthropic's New Tools Cause Market Turmoil
- Market Reaction: Following the launch of Anthropic's Claude Cowork and its industry-specific plugins, the market experienced panic, with stocks of Salesforce, Intuit, and Atlassian dropping by 27.9%, 33%, and 41.6% respectively, reflecting investor fears that AI tools could replace traditional SaaS platforms.
- Alphabet's Stock Decline: Alphabet's shares fell over 6% in the week after the Claude Cowork announcement, raising concerns among investors about its competitive position in AI, despite not directly offering industry-specific software, which affected market confidence.
- Competitive Pressure from Gemini 3: Google's Gemini 3 LLM update launched in November significantly enhanced its AI capabilities, attracting a surge of paid subscribers, leading investors to worry that Claude Cowork might further poach these users, increasing market uncertainty.
- Investor Buying Opportunity: Despite market volatility, renowned investors like Warren Buffett and Cathie Wood actively increased their stakes in Alphabet during the stock's decline, investing $21.6 million and $15 million respectively, indicating confidence in Alphabet's long-term value and potentially providing a buying opportunity for other investors.
See More
Alphabet Shares Decline Due to Claude Cowork Launch
- Stock Price Decline: Alphabet's shares fell over 6% following the launch of Claude Cowork, which, while not directly impacting Google's core business, raised concerns about competition with Google's Gemini 3 AI tool, leading to negative investor sentiment.
- Investor Activity: Notable investor Cathie Wood took advantage of the dip by purchasing $21.6 million in Alphabet shares through her Ark Invest funds on February 5, indicating confidence in the company's future potential despite current market challenges.
- Industry Impact: The rollout of Claude Cowork negatively affected several business software companies, with Salesforce, Intuit, and Atlassian experiencing stock declines of 27.9%, 33%, and 41.6%, respectively, reflecting market fears that AI tools could replace traditional SaaS platforms.
- Competitive Pressure: Despite Google's advancements with Gemini 3 in the AI space, investors remain concerned that Claude Cowork could lure away paid subscribers from Gemini, potentially undermining Google's competitive position in the AI market.
See More
AI Trade Sentiment Reverses, Four Major Industries Hit Hard
- Software Sector Hit: The iShares Tech-Expanded Software Sector ETF (NYSE:IGV) has plummeted nearly 20% year-to-date, making it the worst-performing industry, as fears mount that AI tools could disintermediate traditional software providers, causing forward P/E ratios for application software to drop from 35.3 to 23.7 and systems software from 35.5 to 23.3, reflecting market concerns over future earnings durability.
- Brokerage Pressure: Investment banks and brokerage firms are under pressure following the rollout of AI tools by fintech firm Altruist, with forward P/E ratios declining from 24.7 to 15.9, as the market fears that AI could replace traditional advisors in the future, leading to long-term margin compression.
- Insurance Broker Anxiety: Insurance brokers are facing disruption due to the integration of AI-driven tools, with the S&P Insurance Brokers industry index down 4% year-to-date; while the insurance sector remains relationship-driven, there are concerns that AI could erode commissions, impacting brokers' income stability.
- Asset Management Damage: Alternative asset managers are indirectly affected by significant exposure to private software companies, with many large firms down double digits year-to-date, as declining public software valuations raise concerns about their private portfolios, shrinking exit opportunities.
See More
