: AI Software Selloff: M&A Activity Set to Surge
- Cloud software stocks have started this year where they left off in 2025: sell-off mode.
- The continued downward spiral is setting the stage for a flurry of acquisitions, investors told CNBC.
- The WisdomTree Cloud Computing Fund, which tracks cloud software, has dropped more than 8% so far this year, while the Nasdaq is slightly up.
Cloud software stocks have started this year where they left off in 2025: sell-off mode.
The continued downward spiral is setting the stage for a flurry of acquisitions, investors told CNBC.
The WisdomTree Cloud Computing Fund, which tracks cloud software, has dropped more than 8% so far this year, while the Nasdaq is slightly up. Leading software names like Salesforce, ServiceNow and Adobe are down more than 14% after badly underperforming the market a year ago.
the overriding concern is that artificial intelligence will eventually displace key pieces of the enterprise stack, as IT buyers turn to AI agents to handle tasks currently handled by software vendors, both large and small. Those fears were amplified last week when Anthropic’s Claude launched an AI agent tool named Cowork that is aimed at the enterprise customer.
A senior investor at a large private equity fund w
ServiceNow Stock Declines After OpenAI Partnership Announcement
Table of Contents
ServiceNow’s stock experienced a six-day decline following its January 17, 2026, announcement of a partnership with OpenAI to integrate OpenAI’s models into its AI agent offerings for businesses.
Details of the ServiceNow-OpenAI Collaboration
ServiceNow announced on January 17, 2026, that it will leverage OpenAI’s models to enhance its AI capabilities, specifically focusing on providing AI agents to its business customers. This move positions ServiceNow to compete more directly with other software companies integrating similar AI technologies. The partnership aims to improve automation and efficiency within ServiceNow’s platform.
Stock Performance and Market Reaction
Despite the potential benefits of the OpenAI partnership, ServiceNow’s stock (NYSE: NOW) faced negative market reaction. Shares fell for six consecutive trading days before a slight recovery on January 23, 2026. As of January 23, 2026, ServiceNow stock was down 17% for the month of January.
Impact on Competitors
The announcement also affected the stock performance of ServiceNow’s competitors. HubSpot (NYSE: HUBS) and Atlassian (NASDAQ: TEAM) also experienced market fluctuations in the wake of the ServiceNow-OpenAI deal, indicating increased investor scrutiny of the competitive landscape in the AI-powered software market.