Concerns about ServiceNow and IBM’s quarterly results have triggered a broad selloff across enterprise software on Thursday, with shares in the sector falling sharply in premarket trading. 

ServiceNow dropped 13.1%, while Salesforce fell 4.5%, Oracle shed 3%, Intuit lost 2.9%, Adobe declined 2.3%, Palo Alto Networks slipped 2.1% and Palantir eased 1.6%.

IBM is down 7.1% after it revealed that revenue growth slowed in the first quarter, weighed down by weakness in its software business.

For ServiceNow, there was a 75 basis point headwind to subscription revenue growth from on-premises deal slippage in the Middle East, amounting to roughly $23 million, which Truist analyst Miller Jump described as a contained instance. 

In a note following ServiceNow’s results, Jump said the reaction serves as a warning for the wider group. “With heightened scrutiny on software vendors as frontier labs ramp enterprise revenue, the penalty for missteps becomes more severe,” Jump writes, cutting his price target on ServiceNow to $120 from $125.

Even so, the analyst added: “While we don’t overlook this, we remain focused on AI as the more critical arena for NOW to win in, and we continue to believe that NOW has attractive positioning in the long term buildout of enterprise AI.”

Concerns about AI disruption in the software sector have continued to grow, especially after Anthropic announced new tools in February to automate tasks such as marketing and data analytics. Investors are questioning the impact new AI-related products could have on traditional software businesses.