Tuesday’s session shook the markets, but on closer inspection there is nothing irrational about it. In a few hours, nearly $300 billion in capitalization evaporated from stocks linked to software, financial data and services. The shock wave affected historic publishers as well as data providers, service platforms and, in turn, the major private equity players. Behind this synchronized correction, the Stock Exchange is resuming an economic model which has been a hit with many investors, that of sticky software.
The software, the asset that ticked all the boxes
Over the last decade, software has established itself as the ideal asset, with its contractual recurrence, low churn, and deep integration into organizations. Everything combined to make it a safe haven for growth. So groups like Hubspot or Salesforce have built their valuation on this promise of predictability. The software being not only a tool but an operational infrastructure, difficult to replace, recurrence justified multiples, complexity acted as a moat, and organizational inertia guaranteed income. A great deal that the AI disrupts.
When AI makes moat questionable
If generative artificial intelligence did not challenge this model overnight, it revealed its blind spots. The correction first hit the players most exposed to the structuring of information and workflows, particularly in the legal and data sectors including Thomson Reuters, LegalZoom, London Stock Exchange Group. Not because their products have suddenly lost their usefulness, but because their exclusive advantage now seems questionable.
A contagion that says everything about the risk
The decline was not limited to legal tools and extended to intermediation solutions, whether in payments (PayPal), travel (Expedia Group), analytics and rating (Gartner, S&P Global, Moody’s, FactSet), and even advertising, with Publicis, WPP or Omnicom which were heavily impacted.
What the Stock Exchange Really Charges
This correction does not sanction a drop in activity due to AI, and none of these companies observe an increase in terminations, or a drop in their revenues, quite the contrary. But the Stock Market has chosen not to project itself into the moment and to significantly adjust the current trajectory. It remains to be seen whether it will continue, because what the markets are now integrating into their reasoning is a progressive deterioration in rent-seeking power. The emergence of agents capable of orchestrating uses on top of existing tools introduces new pressure on prices, and above all reduces dependence on the software interface itself.
Private capital on the front line
The market reaction is also hitting major investors who have invested massively in software, like Ares Management, KKR, Blue Owl Capital, Apollo Global Management, Blackstone.
The message is that if the software does not disappear, in a world where the interface becomes intelligent, and autonomous, the value now lies with those who hold truly proprietary data, who are integrated into critical decisions, or who manage to become the orchestration layer themselves.
