Is it ‘illogical’ panic or a SaaS apocalypse?

The Anthropic AI logo is displayed on a mobile phone with a visual digital background.

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The software sector faced renewed market concerns this week after artificial intelligence company Anthropic released new AI tools, triggering a sell-off in software-as-a-service and data provider stocks.

Anthropic’s new AI tools, built for its Claude “Cowork” AI agent, are designed to handle complex professional workflows that many software and data providers sell as core products.

The tools and other similar AI agents target functions ranging from legal and technology research, customer relationship management and analytics. That has raised concerns that AI could undercut traditional software business models.

The S&P 500 Software & Services Index, which has 140 constituents, fell over 4% on Thursday, extending its losing streak to eight sessions. The index is down about 20% so far this year.

Shares of Thomson Reuters, Salesforce and LegalZoom were among the hardest hit in U.S. trading this week, with the sell-off spreading to Asian IT firms Tata Consultancy Services and Infosys.

Despite the market jitters, analysts and tech executives remain divided on the long-term impact of these AI tools on these industries.

‘Illogical’ panic?

Among tech leaders downplaying market concerns that AI will replace enterprise software is Nvidia CEO Jensen Huang.

“There’s this notion that the software industry is in decline and will be replaced by AI,” he said at an event on Wednesday. “It is the most illogical thing in the world.”

The influential tech leader instead argued that AI will use and enhance existing software tools rather than completely reinventing them.

Rene Haas, CEO of British chip designer Arm Holdings, echoed that sentiment this week, arguing during an earnings call that enterprise AI deployment is still in its early days and not yet massively transformative.

Haas described recent market fears as “micro-hysteria” in comments to the Financial…

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