Software and data‑focused equities slipped today, leaving the UK FTSE 100 down a modest 0.07% as investors rotated into other sectors, while Deutsche Bank warned that the pattern echoes the early‑2000 dot‑com bust.
Deutsche Bank warns of dot‑com‑era echoes
Analysts at Deutsche Bank reminded clients that equities began falling in March 2000 as tech stocks dropped sharply. Although consumer staples, utilities and healthcare rallied thereafter, the longer and deeper the sell‑off in a dominant sector, the harder This proves for the broader index to absorb the drag – the 2000 tech losses ultimately pushed the S&P 500 down more than 10% by year‑finish.
One trader on Twitter noted the current drawdown in software “is worse than the COVID‑era melt‑down”.
Amazon shares plunge over $200 bn AI plan
Amazon’s shares tumbled more than 9% in early trading after the company announced a $200 billion capital‑expenditure programme for artificial intelligence, robotics and low‑earth‑orbit satellites in 2026. CEO Andy Jassy said the spend would deliver a strong long‑term return on invested capital, but Saxo analysts warned the budget is “materially higher than markets had expected” and could strain cash‑flow discipline.
RELX loses billions amid AI fears
Information‑and‑analytics firm RELX, owner of LexisNexis, saw its shares drop 4.4% on the day and a 16.5% weekly decline after concerns about AI plug‑ins from startup Anthropic. The fall wiped roughly £7.6 billion off RELX’s market capitalisation.
Broader market reaction
Wall Street opened higher after a volatile week, with the Dow Jones Industrial Average up 0.62% to 49,212, the S&P 500 up 0.50% to 6,832 and the Nasdaq Composite up 0.35% to 22,618. Nonetheless, risk assets remain under pressure as weak US data and AI‑related uncertainty linger.
India’s NIFTY IT index shed around 7% this week, underscoring the global reach of the software sell‑off.
Silver prices too swung wildly, tumbling 19% after a 27% plunge earlier in the month.
Frequently Asked Questions
Why are software and data‑focused stocks falling?
Investors are reacting to large‑scale AI spending plans from major tech firms and worries that the rapid deployment of AI infrastructure could strain cash flows, as highlighted by Deutsche Bank and Saxo analysts.
What does Deutsche Bank’s “dot‑com‑crash” warning imply for the market?
The warning suggests that a prolonged, deep sell‑off in a dominant sector like software can drag down broader indices, similar to the 2000 tech decline that eventually pulled the S&P 500 below its previous highs.
How might Amazon’s $200 bn AI investment affect its financial health?
While Amazon’s CEO expects strong long‑term returns, analysts caution that the spend is materially higher than market expectations and could raise concerns about cash‑flow discipline if earnings do not keep pace.
What do you think could be the next catalyst that might either stabilize or further destabilise the current tech‑driven market turbulence?
