1. Software bloodbath.

A violent sell-off erased over $300 billion in market value from software and data providers this week as Anthropic’s new "Claude Cowork" plugins sparked existential fears for traditional SaaS. The rout expanded Wednesday beyond niche providers to hit industry titans, dragging the S&P Software & Services index down 26% from its October peak.

For now, no one is interested in buying the dip and even good earnings won’t be enough, since AI disruption is a long-term issue.

2. Morgan Stanley’s Market Sentiment Indicator (MSI) signal has turned negative / risk-off.

A “negative regime” is usually associated with below-average returns for global stocks.

3. The evolution of AI: From predictive to agentic systems.

What began as a reliance on traditional predictive models and rule-based automation has now advanced into the era of generative and agentic AI systems. These new systems are not only capable of analysing data and making predictions, but can also autonomously plan, reason, and execute complex, multi-step tasks with minimal human intervention. This shift is fundamentally altering how organisations approach everything from risk management and compliance to customer engagement and operational efficiency.

Source: IBM

4. Google versus OpenAI.

Alphabet smashed top-line estimates as the Gemini 3 rollout fueled a massive surge in enterprise AI adoption. The company reported a 17% jump in search revenue and a staggering 48% increase in cloud sales, marking its first year exceeding $400 billion in total revenue. If only that could have helped its stock price, as the stock jumped and then retreated as investors priced in the search giant’s expensive AI plans.

Management signaled aggressive infrastructure expansion, projecting 2026 capital expenditures between $175 billion and $185 billion. This nearly doubles the 2025 spend, highlighting a massive commitment to securing dominance in the generative AI era.

5. And when there is panic, there is opportunity.

RELX (Reed Elsevier) should keep a high market share in high-value, complex legal solutions that need to be grounded in authoritative information.

RELX will face competition from Claude, Harvey and other legal AI start-ups for maintenance workflows that are applied to customers’ internal information. However, RELX can build share as it leverages its must-have information to offer an integrated platform solution. RELX has already launched hundreds of pre-built and configurable legal workflows that has already helped accelerate RELX’s legal growth from 5% in 2022 to 9% last year.
Claude Cowork is just catching up with the products already offered by RELX, and given the lack of a complete legal library it seems unlikely it will ever be able to match the full set of agentic solutions offered by RELX.
The stock is extremely oversold and will bounce.

6. China consumer stocks catch a bid before Chinese New Year.

European Luxury Companies so far in the ongoing earnings season have reported decent trends driven by retail, in-line or above our expectations, overall indicating a solid festive season and generally favourable luxury backdrop (albeit volatile and polarised luxury backdrop).

Here are some price targets for the sector:

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