What Happened
U.S. stocks traded unevenly on Thursday as investors dealt with two very different pressures at the same time: higher oil prices tied to stalled U.S.-Iran talks, and a sharp selloff in software stocks after earnings from ServiceNow and IBM disappointed the market.
The S&P 500 edged up 0.1%, the Dow Jones Industrial Average slipped about 0.1%, and the Nasdaq Composite also hovered around a 0.1% decline after recovering some earlier weakness.
The mixed action made sense. Oil and geopolitics were pressuring sentiment from one side, while a sudden repricing in software was dragging on one of the market’s most important growth groups from the other.
Oil Became A Problem Again
A major part of the day’s hesitation came from the energy market.
The source says Brent crude moved back above $103 per barrel, while WTI climbed above $93 after Iran and the U.S. failed to meet for another round of peace talks. That marked a fourth straight day of gains in oil.
That matters because higher crude immediately revives the same fears the market has been wrestling with for weeks:
- stickier inflation
- higher fuel costs
- more pressure on consumers and transport-heavy industries
- and greater macro uncertainty if the conflict drags on
Even when stocks try to hold up, sustained strength in oil usually makes the broader tape harder to trust.
Software Was The Day’s Biggest Drag
The clearest pressure inside equities came from software.
The source says ServiceNow dropped more than 16% despite posting a beat-and-raise quarter, while IBM fell sharply as investors stayed focused on slowing growth and AI-related disruption concerns. The broader software ETF fell about 5%, marking one of the ugliest days the group has seen in a long time.
That matters because software had been trying to recover. Instead, the sector ran straight into a market that no longer seems willing to reward merely decent numbers. Investors wanted clean reassurance. They did not get it.
Why ServiceNow And IBM Hit So Hard
The selloff shows how unforgiving the market has become toward software names.
In ServiceNow’s case, investors reportedly focused on delayed deal closings in the Middle East and a near-term margin hit tied to the Armis acquisition. In IBM’s case, the pressure came from concern that AI could make parts of the company’s business more vulnerable than management is admitting.
That is the deeper issue running through the whole sector right now.
Investors are increasingly sorting software companies into two buckets:
- those they think will benefit directly from AI
- those they worry could be disrupted or commoditized by it
That is why even companies that beat on the surface are still getting punished if the market sees any weakness in growth, margins, or product durability.
This Was A Broad Software Washout
The pain did not stop at two names.
The source points to heavy losses across a wide range of software and enterprise tech stocks, including names such as:
- Adobe
- Salesforce
- Atlassian
- HubSpot
- Workday
- Snowflake
- Autodesk
- Datadog
- CrowdStrike
- Oracle
- Shopify
- Zscaler
- DocuSign
That matters because a broad group selloff usually signals a bigger narrative shift, not just disappointment with one company. The market is clearly reassessing software valuations and asking whether the group still deserves the kind of premium it carried before AI began threatening parts of the old business model.
Tesla Added Another Cautious Read-Through
The market also had to process Tesla’s latest earnings reaction.
The stock initially rose after the report, but then turned lower after Elon Musk signaled a major capital expenditure push that will weigh on cash flow. That matters because Tesla is one of the market’s most important high-beta names, and a cautious reaction there can reinforce the sense that investors are still scrutinizing spending and return profiles very closely.
Even when the broader market wants to buy growth, it still wants discipline.
Semiconductors Are Telling A Very Different Story
One of the most important undercurrents in the source is how differently semiconductors are behaving compared with software.
The source says chip stocks have added more than $3 trillion in market value in only 17 trading days, with the PHLX Semiconductor Index pushing through an enormous winning streak and many major names hitting fresh highs.
That tells you the market is not moving away from AI. It is moving away from specific parts of the old software trade and toward the parts of AI spending that look more directly connected to:
- chips
- memory
- foundries
- data centers
- power infrastructure
That is a huge distinction.
Investors are not abandoning tech. They are rotating within it.
But The Chip Trade Is Starting To Look Crowded
The source also includes a warning worth taking seriously.
The semiconductor group is now described as the most stretched above its 200-day moving average since 2000. That does not automatically mean a reversal is imminent, but it does mean the group is running from a very extended position.
That matters because the strongest trade in the market often becomes the most vulnerable if sentiment suddenly shifts. If semis keep going higher, they will be doing it from one of the most crowded setups in decades.
That does not kill the bull case. It just raises the risk of sharper pullbacks along the way.
Blackstone Highlighted Where The Big Money Is Going
Another useful read-through in the source came from Blackstone.
The firm said the AI buildout is now the biggest driver of its investments, with strong performance in areas such as:
- data centers
- LNG
- battery storage
That matters because it reinforces the same message the market is already showing in public equities: the infrastructure around AI is being treated as one of the most attractive places to deploy capital.
That stands in contrast to software, where investors are getting more cautious about which business models will actually benefit and which ones may face margin or relevance pressure.
The Market Is Drawing A Sharper Line Inside Tech
This is really the bigger story of the day.
The market is becoming much more selective inside technology. Instead of treating all tech as one trade, it is splitting the sector into:
- AI infrastructure winners
- and AI disruption risks
The winners right now are the companies tied to compute, chips, data centers, and the power systems needed to support them. The laggards are increasingly the software names that investors fear could be pressured by generative AI, automation, or weaker pricing power.
That is why Thursday’s tape mattered so much. It was not just a down day in software. It was another sign that the market’s AI hierarchy is getting clearer.
WSA Take
Thursday’s mixed session showed a market being pulled in two directions. Oil is rising again because the Iran situation still looks unstable, which keeps inflation worries alive. At the same time, the market is aggressively rotating within tech, rewarding AI infrastructure while punishing software where the AI story looks less secure.
For investors, the key takeaway is that this is no longer a simple “buy tech” market. It is a much narrower, more selective trade. Semiconductors, data center, and power-related names are still acting like leaders, while much of software is now being forced to prove it will be helped by AI rather than hurt by it.
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