Software stocks took a massive hit Thursday after SAP gave a weak cloud outlook and ServiceNow slid despite beating revenue estimates. The sector is down because investors are worried AI is going to disrupt the traditional SaaS subscription model. SAP dropped over 16% and ServiceNow fell 11%. It dragged the whole sector down with Microsoft losing 12% and Salesforce down 7%. The S&P Software and Services Index hit a nine-month low. The only green spot seems to be chip makers and memory firms which are still benefiting from the AI trend.