Fortinet plunges 26% dragging down software sector on AI agent fears
Fortinet shares crashed 26% after hours despite beating earnings expectations, triggering a sector-wide sell-off driven by fears that AI agents may render traditional software subscriptions obsolete. The iShares Software ETF fell 3.8% as investors punished any sign of deceleration.
Fortinet shares crashed 26% after hours, despite beating earnings expectations, because service revenue missed forecasts. This triggered a sector-wide sell-off driven by fears that AI agents may render traditional software subscriptions obsolete. ServiceNow fell 8%, Salesforce dropped 5.6%, Palo Alto Networks lost 5.2%, and CrowdStrike declined 4.3%. The iShares Software ETF fell 3.8%.
A JP Morgan trader commented that "slowing down is not tolerated." This occurred in a market where the VIX index fell below 17, indicating calm in the broad index, while the VIX-EQ, which measures single-stock volatility, stood at nearly 42, highlighting extreme divergence between index stability and individual stock risk. The market is punishing any sign of deceleration in software companies, driven by the narrative that AI agents threaten the recurring revenue model of traditional SaaS.