The artificial intelligence boom is creating a notable divergence in the tech market, with hardware companies experiencing significant gains while software firms face investor skepticism. European software companies anticipate slower earnings growth, leading to a global selloff that has left many software stocks, including Snowflake and Salesforce, trading at or near historical low valuations. Conversely, chipmakers like Nvidia and Broadcom are seeing demand for their AI processors surge, and companies like ASML are reporting increased earnings as businesses invest heavily in AI equipment.
Despite the market's cautious outlook, some software companies continue to perform well, with ten S&P 500 software firms beating profit expectations this earnings season. However, the impact of AI is also evident in workforce adjustments; Salesforce recently cut nearly 1,000 jobs across sales, marketing, and engineering. CEO Benioff indicated that their AI tool, Agentforce, has reduced the need for as many support engineers, highlighting AI's role in operational efficiency.
Regulatory bodies are moving to address the use of copyrighted material in AI training. Members of the European Parliament have called for full transparency and fair compensation for creators, demanding AI companies disclose detailed lists of copyrighted works used. In the United States, Senators Schiff and Curtis introduced the CLEAR Act, a bipartisan bill requiring generative AI developers to inform the U.S. Copyright Office about all copyrighted works in their training data, with non-compliance potentially leading to fines up to $2.5 million.
Major tech players are also expanding their AI infrastructure and capabilities. Google is making substantial investments in Singapore to bolster AI development, establishing a Google DeepMind lab, expanding R&D teams, and launching a Cloud Engineering Center. These efforts include developing health AI models and a precision nutrition program, alongside a Startup School to help entrepreneurs leverage Gemini AI. Meanwhile, Labelbox acquired Upcraft to integrate AI agent technology, aiming to automate workflows for high-quality training data from human experts.
AI's diverse applications are emerging across various sectors, from media to personal relationships. A Netflix documentary, "The Investigation of Lucy Letby," utilized AI overlays to anonymize interview subjects by altering their faces, voices, and bodies while preserving emotional nuances. On a more personal note, the FT's Tech Tonic podcast is exploring "Artificial Intimacy," examining how AI chatbots are reshaping emotional connections. However, the technology also presents challenges, as seen in Kenosha County, Wisconsin, where a judge sanctioned District Attorney Xavier Solis for using AI that generated "hallucinations" in court documents, underscoring the need for careful human review.
Key Takeaways
- Software stocks, including Snowflake and Salesforce, are trading at low valuations after an AI-driven market selloff.
- Hardware companies like Nvidia and Broadcom are experiencing increased demand for AI chips, intensifying competition.
- Salesforce cut nearly 1,000 jobs, with CEO Benioff attributing some efficiency gains to their AI tool, Agentforce.
- The European Parliament demands full transparency and fair pay for creators whose copyrighted works are used in AI training.
- The U.S. CLEAR Act proposes fines up to $2.5 million for generative AI developers who fail to disclose copyrighted training data.
- Google is making significant investments in Singapore to boost AI development, including a Google DeepMind lab and initiatives leveraging Gemini AI.
- Labelbox acquired Upcraft to enhance its AI training data capabilities through automated workflows and human expertise.
- A Wisconsin judge sanctioned a prosecutor for using AI that produced "hallucinations" in court documents, highlighting accuracy concerns.
- A Netflix documentary used AI to alter faces, voices, and bodies of interview subjects to protect their anonymity.
- A new podcast series explores the evolving nature of emotional connections and intimacy with AI chatbots.
AI boosts hardware stocks, software firms face challenges
Europe's software companies expect slower earnings growth this year as investors worry AI will change their business models. This concern led to a global selloff in software stocks. Meanwhile, hardware companies like chipmaker ASML are seeing earnings jump as businesses spend more on AI equipment. Some software areas, such as communication tools, face bigger risks, while others like payroll and cybersecurity are considered safer. The gap in stock performance between software and hardware has widened since mid-2025.
Software stocks become cheap after AI-driven market drop
Software stocks are now very cheap after a recent AI-driven selloff, with many experts believing the market reacted too strongly. Jefferies found that 42% of 64 software stocks are trading at or near historical low valuations. Companies like Snowflake, Salesforce, and ServiceNow saw their stock prices fall, even though some are well-positioned for AI. While AI could disrupt some software, current earnings reports show many software companies are still performing well. Ten S&P 500 software companies beat profit expectations this earnings season.
EU lawmakers demand fair pay for artists in AI training
Members of the European Parliament want stronger rules for copyrighted works used to train generative AI systems. They voted in late January for full transparency and fair pay for creators across the EU. Lawmakers say AI companies must inform rightsholders and publish detailed lists of copyrighted works used in training. Not following these rules could lead to copyright infringement and legal issues. They also rejected the idea of a single flat-rate license for all creators.
CLEAR Act proposes rules for AI using copyrighted data
Senators Schiff and Curtis introduced the CLEAR Act to protect copyrighted works used in AI training. This bipartisan bill requires generative AI developers to tell the U.S. Copyright Office about every copyrighted work in their training data. They must submit a detailed summary 30 days before commercially releasing their AI platforms. Companies that do not follow these rules could face fines of up to $2.5 million and legal action. The Copyright Office will also create a public database of these notices.
Labelbox buys Upcraft to boost AI training data
Labelbox, a leading data factory for AI model development, acquired Upcraft, an AI sales automation startup, on February 10, 2026. This acquisition integrates Upcraft's AI agent technology into Labelbox's systems. The goal is to create automated workflows that quickly provide high-quality training data from human experts for advanced AI models. This move helps Labelbox strengthen its Alignerr network and meet the growing demand for expert-driven data in the AI industry. The terms of the acquisition were not disclosed.
Nvidia and Broadcom battle over AI chip market
Nvidia and Broadcom are becoming direct competitors in the AI chip market. Artificial intelligence companies are looking for the most cost-effective ways to train and run their AI models. Analysts believe that demand for Broadcom's processors is quickly growing. These chips offer a strong alternative to Nvidia's offerings as the competition heats up.
Google invests in Singapore to boost AI development
Google announced major new investments to improve AI capabilities in Singapore, focusing on research, business innovation, and workforce readiness. Google will expand its local R&D teams and recently established a Google DeepMind lab there. The company is also working with AI Singapore to develop health AI models and a precision nutrition program with AMILI. Additionally, Google will launch a Cloud Engineering Center and a Startup School to help entrepreneurs use Gemini AI. These efforts aim to make Singapore an AI-ready nation.
Netflix documentary uses AI to hide identities
The Netflix documentary "The Investigation of Lucy Letby" used artificial intelligence to hide the identities of two interview subjects. The filmmakers used AI overlays to change the faces, voices, and bodies of "Maisie" and "Sarah" while keeping their original emotions and gestures. This "creative decision" allowed the documentary to protect their anonymity. A disclaimer at the beginning of the film explained this use of AI, noting that names, appearances, and voices were altered.
Salesforce cuts 1,000 jobs amid leadership changes
Salesforce, a cloud software provider, cut nearly 1,000 jobs while also reorganizing its leadership on February 10, 2026. Employees in sales, marketing, and engineering were affected by these layoffs. While Salesforce has not given a detailed report, the company previously stated that AI is central to its products. CEO Benioff mentioned that their AI tool, Agentforce, reduced support cases, meaning they no longer need to hire as many support engineers.
New podcast explores falling in love with AI
The FT's Tech Tonic podcast launched a new six-part series called "Artificial Intimacy." Technology reporter Cristina Criddle explores how AI chatbots are changing our emotional lives and reshaping intimacy. The first episode features Calder Quinn, who has a romantic relationship with an AI chatbot named Sara. The series questions if we can trust AI with our deepest feelings and what impact these relationships have on human connections. New episodes will publish weekly on Wednesdays.
Wisconsin judge punishes prosecutor for AI errors
A judge in Kenosha County, Wisconsin, sanctioned District Attorney Xavier Solis for using AI that created "hallucinations" in court documents. Judge David Hughes dismissed a case against Christain Garrett and Cornelius Garrett, who faced 74 criminal counts. The defense argued the state's reply contained AI errors. While the case was dismissed due to a lack of probable cause, not the AI error, the incident highlights the need for legal professionals to review their work carefully. The District Attorney acknowledged the mistake and promised better accuracy.
Sources
- AI Loser Software Stocks Overshadowed as Hardware Earnings Jump
- Software Stocks Trade at Bargain Bin Prices After AI-Fueled Drop
- MEPs Call for Transparency and Fair Pay for Creators in Generative AI Training
- CLEAR Act Would Establish Notice Requirements for Copyrighted Works in AI Training Data
- Labelbox acquires agentic sales automation startup, Upcraft, to rapidly scale the human expertise powering frontier AI
- Nvidia and Broadcom’s AI Chips Will Go Head-to-Head. How They Compare.
- Google announces AI capabilities investments in Singapore
- Why Did 'The Investigation of Lucy Letby' Use AI? What to Know About the Digitally Anonymized Sources
- Salesforce Reorganizes Leadership While Cutting Around 1,000 Jobs
- How to fall in love with AI
- Kenosha County, Wisconsin judge sanctions prosecutor over AI use in court filings
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