AI Disruption Triggers $26B Software Market Selloff -

AI Shakes the Software Market

The software industry just faced a sharp reality check. Shares of Monday.com dropped nearly 30% after reporting results that failed to meet high investor expectations. But analysts say the selloff runs deeper than one company’s earnings miss. Growing concerns that artificial intelligence could disrupt traditional software models are driving a wider market retreat.

SAP, Europe’s largest tech company, slid over 7% in Frankfurt trading, wiping out close to $26 billion in market value. Other big names such as Sage and Dassault Systèmes also fell, echoing earlier declines in U.S. giants like Salesforce and Workday.

Key points from the selloff:

AI disruption fears: Investors worry AI tools could replace costly software products.
Market-wide impact: $26B erased from SAP’s valuation; other software firms follow suit.
Shifting sentiment: Analysts warn of volatile valuations as AI changes the industry.

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At the center of investor anxiety is the belief that AI—cheaper, faster, and increasingly powerful—could make many current software solutions less valuable. OpenAI CEO Sam Altman recently compared the shift to a “fast fashion” phase in tech, where applications are built quickly and commoditized just as fast. RBC Capital Markets referred to it as the “death of software” narrative, saying it could keep pressure on valuations.

The uncertainty extends beyond SaaS. Research firm Gartner recently cut its annual outlook, with some analysts suggesting that AI tools may also reduce demand for legacy consulting and research services.

Despite the pessimism, some investors see opportunity. Morgan Stanley upgraded Monday.com to “overweight” after the sharp drop, arguing that much of the AI risk is already priced in. Jefferies analyst Brent Thill called fears of AI “overblown,” noting that market reactions may be ahead of reality.