Sell first, ask later! Has the "software panic theory" gone too far? Wall Street always overestimates the capabilities of tech companies
Bloomberg columnist Dave Lee stated that the market's concerns are as absurd as firing Spielberg because someone invented a new camera. Anthropic's attempt to replace professional software companies is like shooting themselves in the foot; transforming them into clients is a faster and more sustainable path to profitability. As JPMorgan Chase pointed out, software stocks are being "sentenced without trial." AI will certainly disrupt the software industry, just as the internet and mobile era did, but in the end, there will be both winners and losers
Wall Street's panic selling of software companies is replaying an old script in the tech industry.
On Thursday, Bloomberg columnist Dave Lee stated in his latest article that just four paragraphs on the Anthropic PBC website triggered a $300 billion stock market crash, but this reaction may have been excessive. NVIDIA CEO Jensen Huang called this assumption "the least logical," and history shows that the market always tends to overestimate the ability of tech giants to disrupt specialized fields.
Last week, Anthropic quietly released a plugin for its Cowork feature, claiming that the tool could "accelerate the contract review, confidentiality agreement classification, and compliance workflows of internal legal teams." This news became the catalyst for the widespread sell-off of professional software stocks on Tuesday. Jefferies analysts referred to it as the "SaaS apocalypse," with the market worried that professional software companies are vulnerable to one-stop AI tools, even if these companies are not eliminated, their profit margins will be severely impacted.
Dave believes that both assumptions are premature. General AI has indeed become more powerful, but better AI does not automatically mean a decrease in demand for professional software. Anthropic's AI can browse legal documents, but this does not address the risk management, workflows, accountability, and integration features that tools built specifically for that task possess. When problems arise, businesses expect a dedicated support team to fix them at any time.
More critically, Anthropic's attempt to replace professional software companies is akin to shooting itself in the foot; transforming these companies into clients is a faster and more sustainable path to profitability. Companies like UK-based Relx and Ireland's Experian, as well as SAP, ServiceNow, and Synopsys, which were severely impacted in this round of sell-offs, are potential clients of Anthropic rather than competitors.
History Repeats Itself
Dave believes that traders habitually overestimate tech companies' ability to solve particularly difficult and specialized problems.
When Amazon announced its entry into the healthcare sector, healthcare stocks plummeted; when the company announced it would disrupt the grocery industry, grocery stocks also fell; when Zuckerberg announced the launch of Facebook Dating, Match Group's market value evaporated by 20%.
Similar situations have played out in the gaming industry. When Google announced the launch of Project Genie—an AI tool that can "generate" interactive experiences in real-time, gaming companies saw their market value drop by about $40 billion. TakeTwo Interactive Software's stock price has fallen nearly 8% since then.
But to think that Google's generative tools pose a threat to the creative genius behind Grand Theft Auto is as absurd as firing Spielberg because someone invented a new camera.
The Market Lacks Composure in the AI Era
Professional software companies are integrating AI as a feature rather than the main character. Design tool Canva has integrated AI as a feature, while the integrated application development platform offered by programming platform Replit is more comprehensive than Anthropic's Claude Code, yet it uses Anthropic's model as its foundation JPMorgan analyst Tony Ogg stated that software stocks are being "sentenced without trial." Will the software industry be disrupted? Undoubtedly—but the advent of the internet and mobile computing also disrupted this industry, ultimately resulting in both winners and losers. AI may bring about even greater disruption, but that doesn't mean knee-jerk reactions suddenly become rational.
Dave believes that whether it's SaaS, video games, or other AI-affected industries, the fundamental issue is that Wall Street lacks the psychological resilience to cope with the AI era. When the market perceives bad news, it panics, and when emotions are high, it becomes overly excited. This is partly attributed to the hype surrounding AI companies, but even the biggest supporters of AI do not consider doomsday predictions for the software industry to be reasonable.
According to Bloomberg, Jensen Huang responded to the sell-off by saying, "Would you use a screwdriver or invent a new screwdriver?" This metaphor captures the essence of the problem: AI tools are more likely to enhance rather than replace professional software
