The technology sector saw a resurgence on Wednesday after artificial intelligence start-up Anthropic signalled it aims to build partnerships rather than replace existing services. However, investors remain cautious, debating whether the rebound in tech stocks, both globally and in Australia, represents a genuine buying opportunity or merely a temporary “dead cat bounce.” Anthropic’s chatbot, Claude, had previously triggered a sell-off in software companies due to concerns about AI disruption. The fate of the sector now hinges on the quarterly results of chip giant Nvidia.
Concerns over high valuations in the technology sector have prompted some investors to reduce their exposure. GQG Partners notably shifted investments from tech to older industries last year. Hyperion Asset Management also recently trimmed its tech holdings. The software sell-off impacted other high-profile investors. But Canaccord Genuity suggests the market’s reaction to AI disruption, dubbed the “SaaSpocalypse,” was excessive. They noted that cooler heads are now finding bargains in undervalued stocks, believing the market has overreacted in defining potential disruptions.
Australian technology companies experienced gains exceeding 5 per cent following Anthropic’s announcement that Claude would enhance, not replace, existing software systems. This also alleviated fears sparked by hypothetical scenarios, such as Citrini Research’s prediction of mass unemployment due to AI by 2028. Bank of America’s client survey indicates growing concerns about an “AI bubble,” with nearly one in four respondents viewing it as a significant threat.
ASX-listed software company WiseTech Global, which provides software solutions for the logistics industry, rallied on Wednesday after announcing plans to reduce its workforce by up to 2000 employees over the next two years as it invests in AI. TechnologyOne, which develops enterprise software solutions, also saw a gain, with Canaccord Genuity suggesting it has been oversold due to unwarranted fears of AI disruption.
