AWS CEO Garman says software AI fears are 'overblown'

Matt Garman, the CEO of Amazon Web Services (AWS), recently addressed investor anxieties surrounding artificial intelligence and its potential impact on the growth of major software firms. In an interview with CNBC's Jon Fortt, Garman expressed his belief that much of the fear surrounding AI technology is exaggerated. The technology sector has faced significant challenges this year, with shares falling sharply after the introduction of AI-driven software from companies like Anthropic and OpenAI. The iShares Expanded Tech-Software Sector Exchange-Traded Fund has experienced a 24% decline in 2026, marking its most challenging year since 2022, as inflation and rising interest rates compel companies to cut back on post-pandemic tech expenditures. Analysts have dubbed the downturn in Software as a Service (SaaS) stocks a "SaaS apocalypse." Despite the market turbulence, software executives maintain that fundamental business metrics remain strong. For instance, the CEO of Databricks recently suggested that the current market correction is an overreaction. AWS reported impressive financial results last week, with its cloud infrastructure segment generating $35.6 billion in the fourth quarter, a 24% increase that surpassed analyst expectations, along with a 35% operating margin that improved from the prior quarter. "AI is a major disruptor that will fundamentally alter software consumption and development," Garman stated. He emphasized that established SaaS providers are well-positioned to thrive in this evolving landscape, provided they continue to innovate and adapt. AWS has been a key revenue source for long-standing software firms like Adobe and Intuit, while also attracting business from AI model developers. Notably, OpenAI committed to a $38 billion investment in AWS last November, further bolstering AWS's position in the market. Garman noted, "Our clients will demand more computing power and infrastructure than ever before, whether through self-management, AI applications, or SaaS solutions." While major software companies have begun to integrate AI features, their growth rates have not surged as expected. For example, AWS client ServiceNow reported a 20.7% year-over-year revenue increase for the fourth quarter, a drop from nearly 26% two years prior. Additionally, concerns about AI's disruptive potential have extended beyond the software sector, with Florida's Algorhythm Holdings announcing that its AI product has enabled logistics clients to quadruple freight volumes without increasing staff, even as C.H. Robinson Worldwide's shares fell by approximately 23% during midday trading.