Software experiencing ‘most exciting moment’ as AI fears hammer stocks
Software Stocks Face AI-Driven Turbulence
Despite the excitement surrounding artificial intelligence, a wave of investor skepticism is hitting software stocks. Box CEO Aaron Levie described the current moment as “the most exciting moment we’ve ever had” in the company’s 20-year history, but Wall Street isn’t sharing the enthusiasm.
The Market Downturn: A Broad Correction
Year-to-date in 2026, the stock market has seen significant declines in the cloud computing sector. The WisdomTree Cloud Computing Fund has fallen approximately 20%, with a 6.5% drop this week alone. Several companies are experiencing even steeper losses: HubSpot is down 39% this year (following a 42% slump in 2025), Figma has plunged 40%, Atlassian is down 35%, and Shopify has dropped 29%. Box itself is down 17% in 2026, marking its steepest monthly drop since 2023.
The Generative AI Paradox
The boom in generative AI, sparked by OpenAI’s ChatGPT over three years ago, has rapidly extended into the business world. New tools are emerging that can create applications, websites, and other digital products with unprecedented speed. This creates a “cognitive dissonance,” as Levie puts it, where companies recognize the potential of AI to enhance their offerings while simultaneously fearing displacement by it.
Why Software Remains Essential
Levie argues that businesses will continue to rely on specialized software vendors for back-office functions and customer relationship management, rather than attempting to build and maintain these systems in-house. This perspective is echoed by Marc Benioff, CEO of Salesforce, who highlighted the rapid growth of Agentforce, Salesforce’s AI-powered automation tool, as “the fastest growing product I have ever seen in the history of Salesforce.”
Industry Leaders Respond
Bill McDermott, CEO of ServiceNow, believes market concerns are unfounded, stating that his company’s products serve “as the semantic layer that makes AI ubiquitous in the enterprise.” Dan Springer, former CEO of DocuSign, agrees, suggesting that ServiceNow’s offerings are currently difficult to replace with AI.
Anthropic’s Impact and Open-Source AI
A significant catalyst for the recent selloff has been advancements at Anthropic, the creator of the Claude AI model. On February 5, 2026, Anthropic announced new capabilities for its Claude Cowork tool in legal, finance, and product marketing, and released the plugins under an open-source license, allowing for customization.
Investor Sentiment and Buying Opportunities
The market currently favours infrastructure companies and AI model developers, while software companies are viewed as potential losers. Anthropic recently secured a funding round at a $350 billion valuation, while OpenAI is reportedly valued at over $800 billion. Alphabet (Google’s parent company) has seen its stock soar, increasing its market cap to $4 trillion.
However, some investors believe the market is overreacting. Analysts at Stifel reported that HubSpot’s business remains strong, with partners not anticipating headcount reductions or seat disruptions due to AI. Cantor analysts covering Monday.com see the stock’s 29% drop this year as creating an “attractive setup.” Byron Deeter of Bessemer Venture Partners encourages a “buy-the-dip” approach, stating, “Chaos creates opportunity!”
The Need for AI Integration
Even if investor fears are overstated, software companies must rapidly embrace AI to remain competitive. Aaron Levie of Box emphasizes that AI is “forcing every incumbent to make sure that they’re doing more for their customers.”
Frequently Asked Questions
- What is driving the software stock sell-off? Investor fears that AI will disrupt the software industry and displace existing solutions.
- Which companies are most affected? HubSpot, Figma, Atlassian, Shopify, Salesforce, and ServiceNow have all experienced significant stock declines.
- Are there any positive signs for software companies? Some analysts believe the market is overreacting and see current price drops as buying opportunities.
- What is Anthropic’s role in this trend? Anthropic’s advancements in AI, particularly with its Claude model and open-source plugins, are accelerating the competitive landscape.
Watch: Software sector loses about 30% of value in three months. Here’s what’s behind the sell-off
— CNBC’s Ari Levy contributed to this report.