Technology Downloads: The “Survival” Software Crisis

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In 2011, venture capitalist Marc Andreessen coined the now-worn phrase, “Software is eating the world.”

There is currently a lot of debate surrounding how much software AI consumes.

Many of the world’s most valuable software stocks have fallen sharply in recent months as investors worried and worried about the future of the once-vaunted software-as-a-service (SaaS) business model.

Investor concerns center on concerns that businesses will buy fewer software licenses as tasks performed by SaaS tools are taken over by AI.

sales force It’s down 21% so far this year. ServiceNow 26%, adobe 22% intuition 37%.

“One thing is certain: the software model in its current form is compromised and most companies that follow it will need to adapt more deeply than they have in years if they are to survive,” Paul Markham, investment director at GAM Investments, told me.

AI evangelists believe this is just the beginning of technological market disruption.

Arthur Mensch, CEO of French AI institute Mistral, told CNBC that more than 50% of current software within companies could be replaced by AI.

Michael Field, chief equity strategist at Morningstar, said near-term software stocks could continue to fall as concerns about AI disruption persist.

He added that investors’ concerns were “overblown” and that while the stock could pare losses over the next six months, it was unlikely to fully recover in that time.

Forrester principal analyst Kate Leggett said those most exposed to AI risks are “horizontal point solution SaaS vendors.”

But companies that offer differentiated solutions for complex industries in areas like healthcare and manufacturing, and those that manage their own proprietary data, will survive, he added.

Field said the idea that complex software developed over decades could be replicated in-house using AI tools was “not feasible.”

Consumer AI platform developers can: google Parent companies Alphabet, OpenAI, and Anthropic have limited experience creating “enterprise-class” software. HSBC analysts said in a note Tuesday.

The bank has buy ratings on a number of software stocks, including ServiceNow, Salesforce, cloud strike.

Software has famous defenders. Wednesday, chip giant Nvidia CEO Jensen Huang told CNBC that the market “misunderstands” the threat AI poses to software companies.

But software’s decline is different from previous tech shocks because it wasn’t caused by “overexcitement or overvaluation,” Markham said.

Instead, “existential question marks” are surrounding the business model that has traditionally been given a valuation premium by investors.

He added: “Given the incredible levels of capital investment that hyperscalers and others are lavishing on AI, it’s hard to argue that this won’t cause problems, and the market is voting enthusiastically.”

head of Amazon’s I decided to leave the General Artificial Intelligence Laboratory less than two years after joining the company.

Fintech startup Stripe Inc. has been valued at $159 billion after a secondary stock sale to employees and shareholders, the company announced Tuesday.

As more companies deploy AI agents and continue to squeeze costs, the number of AI robots will outnumber the workforce within decades, a former Citi executive warned on Monday.

Anthropic CEO Dario Amodei said Thursday that the Pentagon’s threat to remove the company’s tools from the Department of the Army’s systems “does not change our position” on AI.

Nvidia stock fell on Wednesday after the company reported fourth-quarter revenue and guidance that beat analysts’ expectations, with the former up 73% since this time last year.

So what does that give? Concerns about building AI infrastructure continue to hang over the tech sector, putting a lid on investor enthusiasm.

I’ll be keeping an eye on the chip giants’ conferences in March. There, Nvidia is expected to announce more details about its product roadmap and outlook.