IT STOCKS, JOBS, AI FEARS: ‘ATTENTION’ IS WHAT MATTERS

THE decimation of tech and software stock valuations underlines the risks first stated by Alan Turing.

- SHANKKAR AIYAR

This week, the market and IT shares came face to face with their Minsky moment, the tipping point when fears becomes a reality.In less than two trading days, India’s IT shares lost nearly %3 lakh crore of market cap and marquee stocks like TCS and Infosys lost nearly a third of their worth, pushing them back closer to 2022 levels.

It isn’t just in India. Globally, software and services companies Jost trillions of dollars in market value—ServiceNow is down 28 percent year to date, Salesforce 26 percent and Intuit over 34 percent. Tech-Software exchange traded fund slid 20 percent and the MSCI World Software & Services Index was down over 12 percent. Punters coined new phrases—SaaSpocalypse, SaaSmageddon—to define the collapse. The bullishness of 2023, when analysts goaded investors to load up on software stocks, has been replaced by the bearish ‘AI discount’.

Theory oftentimes waits for attention and tangible evidence. As early as 2017, computer scientist Ashish Vaswani, along with seven colleagues, told the world, ‘Attention is all you need.’ The transformative concept of ‘attention mechanism’ led to the launch of ChatGPT. The threat to human interface in software services has been a constant presence. Yet, nobody quite bet against legacy giants—after all, as Hemingway says in The Old Man and the Sea, “Tt is silly not to hope.” Claude Code replaced hope with pessimism and dread, resulting in a one-way trail in valuations.