anthropic unveils new tools as snowflake ships new models

The software sector recently experienced a significant sell-off, with the iShares Expanded Tech-Software Sector ETF dropping over 9%. This decline, which began around February 4, 2026, is largely attributed to concerns that new agentic AI tools, such as Anthropic's Claude, could disrupt traditional enterprise software models. Companies like Cloudflare, Datadog, and Snowflake saw notable drops, contributing to a nearly trillion-dollar market rout in software stocks.

While some experts, like John Campbell, believe the sell-off is an overreaction, others, including Greg Swenson, fear the market slide could continue. JP Morgan analyst Mark Murphy suggests AI is exacerbating an existing industry slowdown. Citi Research advises investors to consider small and mid-cap AI enablers, particularly in hardware and semiconductors, as potentially better long-term plays.

In other AI developments, OpenAI and Amazon are reportedly discussing a deal for OpenAI to create specialized AI models for Amazon's products, including the Alexa voice assistant. This potential partnership could give Amazon an edge against competitors like Microsoft, even as Amazon continues to develop its own AI models. Meanwhile, the California Faculty Association (CFA) is pushing back against the California State University (CSU)'s $17 million AI Initiative, which includes a contract with OpenAI for ChatGPT Edu, citing concerns over intellectual property, academic freedom, and privacy.

Security firm Palo Alto Networks announced an updated NextWave Partner Program on February 5, 2026, designed to boost partner profits and enhance AI-driven security solutions across networks, clouds, and security operations centers. The program offers improved margins, faster deal closures, and a new Partner Development Fund to support growth.

The internet is also seeing a surge in AI bots, leading to a digital "arms race" between bots and websites. A report from TollBit and Akamai indicates that in late 2025, one in 31 website visits came from an AI scraping bot, a significant increase. Websites responded with a 336% rise in attempts to block these bots, which are becoming increasingly sophisticated.

Globally, the military application of AI is a growing concern. At a summit in A Coruna, Spain, on February 5, 2026, 35 out of 85 countries signed a declaration outlining 20 principles for ethical AI use in warfare, emphasizing human responsibility. However, major military powers like the United States and China notably declined to sign this non-binding agreement.

Despite these shifts, AI expert Chris Willis, who has worked with AI for nearly a decade, believes the technology creates new job opportunities for humans. He advises workers to collaborate with AI, emphasizing that human judgment, creativity, and problem-solving remain crucial advantages, countering the "AI hangover" some companies experienced from over-reliance on AI for decision-making.

Key Takeaways

  • Software stocks, including Cloudflare, Datadog, and Snowflake, experienced a significant sell-off, with the iShares Expanded Tech-Software Sector ETF down over 9%, driven by fears of agentic AI tools like Anthropic's Claude.
  • The market rout, which began around February 4, 2026, led to a nearly trillion-dollar decline in software stocks, with some experts debating if it's a buying opportunity or a sign of deeper disruption.
  • OpenAI is in discussions with Amazon to develop specialized AI models for Amazon's products, such as the Alexa voice assistant, to enhance its competitive edge against companies like Microsoft.
  • The California Faculty Association (CFA) filed an Unfair Labor Practice charge against the California State University (CSU) over its $17 million AI Initiative and contract with OpenAI for ChatGPT Edu, citing concerns about intellectual property and academic freedom.
  • Palo Alto Networks updated its NextWave Partner Program on February 5, 2026, to boost partner profits and improve AI-driven security solutions across networks, clouds, and security operations centers.
  • AI scraping bots accounted for 1 in 31 website visits in late 2025, leading to a 336% increase in website attempts to block them, signaling a growing "digital arms race" on the internet.
  • At a military AI summit on February 5, 2026, 35 out of 85 countries signed a declaration on ethical AI use in warfare, but the United States and China notably declined to sign the non-binding agreement.
  • AI expert Chris Willis suggests that AI creates new job opportunities, advising workers to focus on human judgment, creativity, and problem-solving rather than competing directly with AI.
  • Citi Research recommends that investors consider small and mid-cap AI enablers, particularly in hardware and semiconductors, as potentially better long-term investments amidst the current software sector volatility.

AI Fears Drive Software Stock Sell-Off

Software stocks are experiencing a significant sell-off this week, with the iShares Expanded Tech-Software Sector ETF down over 9%. This decline is fueled by worries that new agentic AI tools, like Anthropic's Claude, could disrupt traditional enterprise software businesses. Some experts, like John Campbell, believe the sell-off is too much and that established companies will adapt with their own AI. Others, such as Greg Swenson, fear the market slide could continue and impact the broader tech sector. Investors are debating if this is a buying opportunity or a sign of deeper trouble for the AI market.

Software Stocks Plummet After AI Update

The software sector experienced a major sell-off this week, largely due to Anthropic's Claude LLM update. Companies like Cloudflare, Datadog, and Snowflake saw significant drops. JP Morgan analyst Mark Murphy notes the broad sell-off and believes AI is worsening a slowdown already present in the industry. Jonathan Krinsky of BTIG points to technical indicators suggesting the sector is oversold. Some investors consider this a chance for short-term "bottom fishing" but warn against long-term heavy investment in software due to AI's growing challenge. Citi Research suggests looking at small and mid-cap AI enablers, especially in hardware and semiconductors, as better long-term plays.

Faculty Fights for AI Safeguards in California Universities

The California Faculty Association (CFA) is pushing for ethical safeguards regarding the California State University (CSU) AI Initiative. The CSU spent $17 million on this initiative, including a contract with OpenAI for ChatGPT Edu, without faculty consent. Faculty members are concerned about intellectual property, academic freedom, privacy, and the influence of tech companies on campuses. They have filed an Unfair Labor Practice charge and are working with Senator Sabrina Cervantes on state legislation for AI in higher education. The CFA urges Chancellor García to cancel the OpenAI contract and prioritize human investment over AI tools.

OpenAI May Power Amazon Alexa and Other AI Tools

OpenAI and Amazon are discussing a deal for OpenAI to create special AI models for Amazon's products. These models could power Amazon's Alexa voice assistant and other AI tools. The talks are still happening, and no final agreement has been made. Amazon is investing a lot in AI and developing its own models, but it also faces strong competition from companies like Microsoft. Partnering with OpenAI could help Amazon improve Alexa and other AI products, giving it an edge in the competitive AI market.

Palo Alto Networks Boosts Partner Program for AI Security

Palo Alto Networks announced an updated NextWave Partner Program on February 5, 2026, aiming to boost partner profits and improve AI-driven security. The program encourages partners to integrate security solutions across networks, clouds, and security operations centers, moving away from single products. It offers three main benefits: better partner margins through streamlined rebates, faster deal closures with improved tools, and reinvestment for growth using a new Partner Development Fund. The program also includes tailored paths for different partners like MSSPs, Distributors, GSIs, and Authorized Services. Simone Gammeri, Chief Partnerships Officer, stated the program helps partners provide total, AI-driven resilience.

AI Bots Take Over Internet Sparking Digital Battle

AI bots are rapidly increasing their presence on the internet, leading to a digital "arms race" between bots and websites. A report from TollBit and data from Akamai show that AI bots now make up a significant portion of web traffic. In late 2025, one in 31 website visits came from an AI scraping bot, a big jump from earlier in the year. Websites are fighting back, with a 336% increase in attempts to block bots, but bots are becoming smarter and harder to detect. Experts like Toshit Pangrahi of TollBit believe bots will soon dominate internet traffic, changing how the web works.

Expert Says AI Creates New Job Opportunities for Humans

Chris Willis, an expert who has worked with AI for nearly a decade, believes artificial intelligence creates new opportunities in the job market. He advises workers not to compete with AI but to learn to work alongside it, emphasizing that human judgment remains a key advantage. Willis notes that some companies experienced an "AI hangover" after relying too heavily on AI, realizing it excels at generating content but not at making decisions. He suggests that successful businesses will combine human intelligence with AI, and workers should focus on creativity, problem-solving, and staying curious about the technology.

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US and China Decline Military AI Declaration

At a military AI summit in A Coruna, Spain, on February 5, 2026, 35 out of 85 countries signed a declaration on using artificial intelligence in warfare. This declaration outlined 20 principles, including human responsibility for AI weapons and clear command structures. However, major military powers like the United States and China chose not to sign the non-binding agreement. Dutch Defence Minister Ruben Brekelmans noted a "prisoner's dilemma" where countries want rules but fear limiting themselves compared to rivals. The pledge highlights growing concerns that AI advances could outpace safety rules, increasing risks in military use.

AI Fears Trigger Trillion-Dollar Tech Stock Sell-Off

A massive tech stock sell-off, totaling nearly a trillion dollars in software stocks alone, hit markets this week, driven by concerns that AI will disrupt established business models. The rout, which began around February 4, 2026, affected stocks, bonds, and loans across Silicon Valley and beyond. A new AI tool for legal work from Anthropic PBC sparked fears that AI could soon replace many other industries. Even major AI players like Alphabet and Arm Holdings saw their stocks fall. Experts believe this is the early stage of a major shift, determining which companies will be winners and losers in the AI era.

Sources

NOTE:

This news brief was generated using AI technology (including, but not limited to, Google Gemini API, Llama, Grok, and Mistral) from aggregated news articles, with minimal to no human editing/review. It is provided for informational purposes only and may contain inaccuracies or biases. This is not financial, investment, or professional advice. If you have any questions or concerns, please verify all information with the linked original articles in the Sources section below.

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