Software stocks see worst start to year since 2022 as AI disruption fears mount
The release of Anthropic's "Claude Cowork" appears to have reignited fears of AI disruption, which is also reflected in the stock market.
Anthropic released Claude Cowork on January 12, a kind of office variant of Claude Code. The tool is integrated into the Claude app and can, for example, create spreadsheets from screenshots, generate reports from notes, and organize data on the user's computer. According to Anthropic, it was largely developed with AI itself.
Given the increasingly enthusiastic user reports about Claude Cowork and Claude Code on platforms like X or LinkedIn, severe market reactions have been observed over the past week, Bloomberg reports.
Intuit, owner of TurboTax, lost 16 percent in one week, its worst weekly decline since 2022. Adobe and Salesforce each dropped more than 11 percent. A group of software-as-a-service stocks tracked by Morgan Stanley is down 15 percent so far this year, following a drop of 11 percent in 2025.
Investors see "no reasons to own" software stocks
"The Anthropic news we got underlines how difficult it is to assess what growth can look like going forward," Bryan Wong, portfolio manager at Osterweis Capital Management, told Bloomberg. "The pace of change is about as fast as I can remember, and that makes things about as uncertain as I can remember."
Jordan Klein, a tech-sector specialist at Mizuho Securities, wrote in a client note that the tool represents just the type of capabilities that investors have been fearing. It reinforces bearish positions that are looking increasingly entrenched. "Many buysiders see no reasons to own software no matter how cheap or beaten down the stocks get," Klein wrote.
Although the tool remains unproven, it embodies the existential threat to traditional software business models. Wong explained: "It is hard to know what multiple they should be trading at if they're going up against AI agents that are running 24/7 and have the ability to complete tasks, with big projects getting done in a day."
Chipmakers benefit while software firms struggle
While the Nasdaq 100 Index is flirting with record highs, companies like ServiceNow are trading at the lowest levels in years. Software makers' own AI offerings have shown little traction so far: Salesforce has touted adoption of its Agentforce product, though it hasn't moved the needle significantly for revenue. Adobe didn't update some AI-related measures in its last quarterly earnings report in December.
In contrast, chipmakers like Nvidia have greater visibility into revenue growth thanks to commitments from Microsoft, Amazon, Alphabet, and Meta to spend aggressively on AI infrastructure. "There's a lot less certainty about how AI will change the software ecosystem," said Jonathan Cofsky, portfolio manager at Janus Henderson Investors.
Valuations for software companies have fallen to record lows: A basket of software-as-a-service stocks compiled by Morgan Stanley is priced at 18 times earnings projected over the next 12 months, its cheapest on record. The average over the past decade was more than 55 times. Some analysts like Barclays and Goldman Sachs still see opportunities for a recovery, as valuations are attractive and AI adoption could serve as a tailwind in the long term.
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