Oracle, Software Stocks Fall as AI Trade Seesaws

Oracle stock has dropped 23% this year as investors fret about AI disrupting software. (Justin Sullivan/Getty Images)

Key Points

• Oracle and several other software stocks fell on Monday as investors purchased artificial intelligence chip and memory stocks.
• Software and semiconductor stocks often move in opposite directions because investors expect AI to impact them differently.
• Investors worry that AI vibe-coding tools could eventually replace certain software products, weighing on software stocks this year.

Oracle and a cluster of other software stocks were dropping on Monday.

That’s not surprising, seeing as investors were loading up on some of their go-to artificial intelligence stocks to kick off what ought to be a quiet week for the market.

Shares of software giant Oracle slid 0.5% ahead of the opening bell.

Workflow automation platform ServiceNow dipped 0.7%, advertising technology company Trade Desk declined 2.6%, and enterprise software developer Workday fell 2.9%.

The moves came as shares of chip and memory companies, including Intel and Micron, rallied. Software and semiconductor stocks tend to move in opposite directions because investors think AI will impact them differently.

Large-language models like ChatGPT run off of chips, while demand for memory and networking products has also surged due to the boom in data-center construction.

Meanwhile, AI is expected to upend the software industry because of the rise of so-called vibe-coding tools, which may eventually be able to replace certain products.

Those worries have weighed on stocks this year, and private-equity firms may try to take advantage of the selloff. Silver Lake and Workday have held discussions about a possible takeover in recent months, Reuters reported last week, citing people familiar with the matter.

Workday and Silver Lake didn’t respond to requests for comment from Barron’s.

Write to George Glover at george.glover@dowjones.com

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