Deutsche : AI Investor Misplaced Optimism Sparks Software Market Selloff

el-balad.com · Feb 17, 2026 · Collected from GDELT

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Recent market volatility has raised concerns among investors about the impact of artificial intelligence (AI) across various sectors. This shift reflects what Deutsche Bank describes as a necessary recalibration of previously optimistic expectations regarding the technology’s effects. Market Selloff in Software Stocks Software stocks particularly faced a steep decline as fears grew that advanced AI technologies, like large language models, could outpace traditional services. According to JP Morgan, approximately $2 trillion was lost in software market capitalizations recently. Deutsche Bank analyst Jim Reid pointed out that this situation was not entirely unforeseen. Reid has frequently expressed that determining the long-term winners and losers in technology remains uncertain. He noted that, until recently, markets assumed all tech companies would prosper. However, a more nuanced perspective is emerging as companies and sectors demonstrate varied responsiveness to AI advancements. Investor Perspectives Experts are divided on the implications of AI. Some analysts suggest that the efficiencies brought by AI can benefit most companies, while others warn of potential bubbles forming in certain areas. Jamie Dimon, CEO of JP Morgan, supports the integration of AI but cautions about overinflated asset values, likening the current AI landscape to the internet boom of the late 1990s. Jeremy Siegel, Emeritus Professor of Finance at the University of Pennsylvania, emphasizes the need for thorough scrutiny of corporate investments in AI. He advises investors to evaluate competitive factors and feasibility before committing significant resources. The dynamic nature of technology complicates the identification of sustainable market leaders. Impacts on the Broader Economy While the current atmosphere reflects investors’ hesitancies about AI, renowned economist Ed Yardeni explains that technological shifts often create a self-perpetuating cycle of disruption. He posits that AI has the unique capability of rapidly producing newer iterations of itself, which could lead to swift obsolescence in existing technologies. This rapidly evolving landscape is causing stock sell-offs in companies vulnerable to AI-driven changes. Investors recognize that companies unable to adapt may face greater risks as AI technology continues to advance. Future of the AI Market The ongoing uncertainty indicates that investor sentiment may shift significantly in the coming months. With the tech sector undergoing rapid transformation, both optimistic and pessimistic outlooks will likely persist. As Jim Reid noted, without clear evidence of which companies will emerge as leaders, speculation will continue to dominate market behavior. In summary, the current software market selloff is a response to AI-driven changes. Investors must navigate this landscape with caution, balancing potential risks and opportunities in an era of rapid technological evolution.