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PayPal shares sink after CEO exit and weak 2026 profit outlook

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Shares of PayPal plunged after the company replaced CEO Alex Chriss and issued a disappointing profit outlook for 2026, rattling investors and raising fresh doubts about its turnaround strategy. The board named Enrique Lores, currently head of HP, as the new president and chief executive, saying the pace of change under Chriss fell short of expectations.

PayPal said Chief Financial Officer Jamie Miller will serve as interim CEO until Lores takes over on March 1. The abrupt leadership change came alongside a forecast that adjusted profit next year could range from a slight decline to modest growth, well below Wall Street expectations. Analysts said the combination of a sudden CEO exit and a muted outlook suggests deeper challenges in reviving growth.

The company continues to face pressure from slowing retail spending and intensifying competition from Big Tech and newer fintech rivals. PayPal also reported quarterly revenue and profit below estimates, while growth in its higher-margin branded checkout business slowed sharply, adding to concerns about its core payments franchise.

US software stocks slide as AI disruption fears intensify

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U.S. software stocks fell sharply on Thursday as disappointing outlooks from major players deepened investor concerns that traditional software providers are being overtaken by artificial intelligence-driven competitors. Weak sentiment was triggered after Germany-based SAP issued an underwhelming cloud outlook, while ServiceNow shares dropped despite forecasting stronger subscription revenue.

Investors are increasingly worried that advances in AI, including the rapid and low-cost generation of software code and applications, could undermine the subscription-based software-as-a-service business model. Several high-profile U.S. firms saw steep losses, including Salesforce, Adobe, and Datadog, as the sell-off spread across the sector.

The pressure was compounded by concerns over heavy AI spending. Microsoft reported record AI investment alongside slower cloud growth, sending its shares sharply lower. Analysts said markets are pricing in a worst-case scenario in which AI fundamentally reshapes the software industry faster than incumbents can adapt.

Software stocks were among the biggest decliners on the Nasdaq, while chipmakers and memory firms continued to benefit from AI-driven demand, highlighting a widening divide between hardware and software winners in the AI race.

US IT Hardware Stocks Tumble as Morgan Stanley Flags Slowing Demand

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U.S. IT hardware stocks fell sharply after Morgan Stanley downgraded the sector, warning that corporate demand is weakening as companies rein in spending amid economic uncertainty and rising component costs.

The brokerage cut its industry outlook to “cautious,” citing a “perfect storm” of slowing demand, input cost inflation, and elevated valuations. Analysts said technology leaders are dialing back hardware investment plans, adding pressure to a sector already grappling with supply bottlenecks.

Shares of Hewlett Packard Enterprise and Dell Technologies dropped as much as 5%, while HP Inc fell about 2.5%. U.S.-listed shares of Logitech and NetApp slid between 4% and 5.5% after Morgan Stanley cut both to “underweight.”

The sector-wide selloff dragged the U.S. IT hardware index lower, reflecting broader market weakness. Morgan Stanley’s latest survey showed hardware budgets are expected to grow just 1% year-on-year in 2026, the weakest reading outside the COVID period in roughly 15 years.

While artificial intelligence-related spending has supported some hardware demand, uncertainty linked to tariffs under U.S. President Donald Trump and rising memory costs continue to cloud the outlook. Analysts warned that higher costs and price-sensitive demand could lead to further earnings downgrades into 2026.