Software experiencing 'most exciting moment' as AI fears hammer the stocks

In a striking reflection of the current climate in the software industry, Box CEO Aaron Levie has declared this period as the most exhilarating in the company's 20-year history. However, Wall Street's perspective diverges sharply, as the company's stock has plummeted by 17% in 2026, following its steepest monthly decline since 2023. This downturn has been symptomatic of a broader software market slump, with investors anxious about the potential displacement caused by rising artificial intelligence technologies. The WisdomTree Cloud Computing Fund has experienced a significant decline, dropping nearly 20% this year, including a notable 6.5% slide just this week. Many companies are feeling the brunt of this market shift—HubSpot's stock has tumbled by 39% in 2026, while Figma has seen a 40% decrease, Atlassian is down 35%, and Shopify has dropped by 29%. The surge of generative AI, ignited by OpenAI's ChatGPT just over three years ago, has rapidly permeated the business landscape. New tools are emerging that can create applications, websites, and other digital offerings in mere moments, simply through text prompts. Levie describes a “cognitive dissonance” in the industry, where companies recognize the potential of this new technology to enhance their products but simultaneously grapple with the pervasive fear that AI could threaten their existence. In a recent interview with CNBC's "The Exchange," Levie articulated that businesses would prefer to invest in specialized vendors for back-office software or customer relationship management, rather than taking on the risks associated with managing these functions themselves. Salesforce CEO Marc Benioff echoed similar sentiments, emphasizing that their product, Agentforce, is experiencing unparalleled growth. Bill McDermott, CEO of ServiceNow, recently countered market apprehensions by asserting that his company’s offerings are essential for integrating AI into enterprises. Former DocuSign CEO Dan Springer, now leading legal software startup Ironclad, added that ServiceNow's solutions currently cannot be supplanted by AI. Despite these defenses, both Salesforce and ServiceNow have seen about a 25% drop in their market values this year. A key factor in this selloff is the rapid advancements made by Anthropic, the creator of the Claude AI model. Anthropic recently unveiled new capabilities for its Claude Cowork productivity tool, which are available under an open-source license for customization, positioning itself competitively against OpenAI’s GPT models and Google’s Gemini. Celso Pinto, a senior director at The Access Group, praised Claude's capabilities on social media, noting how it has effectively assisted in a range of tasks from reviewing marketing content to generating legal documents. The current market sentiment appears to favor infrastructure companies and leading AI model developers as the victors of this technological shift, while traditional software firms are seen as potential losers, despite their robust operations. Earlier this month, Anthropic secured a term sheet for a $10 billion funding round, valuing the company at $350 billion. In comparison, OpenAI is reportedly targeting a valuation exceeding $800 billion, and Alphabet, Google's parent company, has seen its stock surge over 60% in the past year, raising its market capitalization to $4 trillion. However, software executives are not entirely resigned to this narrative. Tech analysts have observed that IT buyers are not abandoning their software solutions in droves. A report from Stifel highlighted that HubSpot's business remains stable, with no imminent threats of AI-related job cuts. Similarly, analysts covering Monday.com have praised the company as a profitable entity benefitting from the digital and AI growth trends, recommending it as a buy opportunity. Byron Deeter, a seasoned cloud software investor at Bessemer Venture Partners, advocates for a buy-the-dip strategy, stating, "Chaos creates opportunity!" He believes that significant returns await those willing to invest wisely in both private and public software ventures during this tumultuous time. At Box, Levie asserts that, regardless of investor anxieties, software companies must swiftly adapt to AI advancements to remain competitive, declaring, "AI is causing every software company to have to stay on its toes. This is an incredible development for the market and IT buyers alike."