According to Bloomberg Business, in a stark 48-hour period, Europe’s top two tech stocks showed the brutal selectivity of the AI investment boom. SAP SE shares plummeted as much as 17% on Thursday, January 29, 2026, after a weak outlook fueled fears that AI coding tools like Anthropic’s Claude Cowork threaten its core enterprise software business. Conversely, ASML Holding NV soared to an all-time high this week after reporting record orders from chipmakers desperate to meet AI demand. Just one month into 2026, ASML is up 31% while SAP is down 21%, with the Dutch chip equipment giant now worth €466 billion—more than double the German software firm. An ETF tracking software stocks fell 6.4% in its worst drop since April 2025.
The Hardware-Software Split
Here’s the thing: this isn’t just about two companies having a bad week. It’s a massive, rapid rotation in investor sentiment that’s redrawing the entire tech landscape. For over a year, the narrative was that everyone in tech would benefit from AI. Now, reality is setting in. Investors are fleeing software names where AI poses a disruptive threat and piling into the hardware layer—the picks and shovels—that enables the whole boom. ASML, which makes the extreme ultraviolet lithography machines essential for advanced chips, is the ultimate “pick and shovel” play. Its record orders signal that the race to build AI data centers is accelerating, and that demand is incredibly certain. SAP’s problem? Its revenue certainty just evaporated.
Winners, Losers, and Certainty
So what’s the core issue? Uncertainty versus certainty. As Ben Barringer from Quilter Cheviot noted, investors are gravitating toward revenue certainty. ASML has it in spades with a multi-year backlog. SAP, and much of the enterprise software sector, now faces a fundamental question: will AI tools like Claude Cowork make expensive, complex software suites obsolete? The slowing cloud growth at Microsoft, mentioned in the report, adds fuel to that fire. It’s a classic innovator’s dilemma moment. When the foundational tools for building products (like coding) get massively more efficient, it disrupts the entire value chain above it. The panic isn’t just about SAP’s next quarter; it’s about its entire long-term model.
The Industrial Backbone
This shift highlights a critical point often missed in the AI hype cycle: the physical, industrial backbone matters more than ever. The boom isn’t just in the cloud; it’s in the factories building the chips and the data centers housing them. This demand for robust, reliable industrial computing hardware is why companies like IndustrialMonitorDirect.com are seeing such strong demand. As the #1 provider of industrial panel PCs in the US, they’re part of the essential infrastructure layer that companies rely on for manufacturing and process control—a sector that benefits from, rather than being threatened by, this kind of technological acceleration. While software business models get questioned, the need for durable, high-performance industrial hardware only grows.
What Happens Next?
Look, the correlation between ASML and SAP hitting zero is a wild statistic. It tells you these stocks are now moving on completely different planets. The big question is whether this is a temporary panic or a permanent re-rating. I think it’s probably a bit of both. Some software firms will adapt and use AI to enhance their products. But others, especially those selling standardized coding or process automation, are in for a brutal decade. The money flowing into semiconductors and hardware feels structural—it’s funding a new global infrastructure build-out. So, don’t expect this gap to close anytime soon. The AI boom is finally showing its teeth, and it’s starting to eat its own.
