The rapid rise of artificial intelligence is shaking the foundations of the software industry, with major SaaS providers facing investor skepticism and declining stock prices. Once the darlings of tech, firms like Salesforce, Adobe, and Atlassian are now under pressure as AI tools capable of writing and developing code disrupt traditional business models.
Shares in Salesforce (CRM) are down 26% year-to-date, Adobe (ADBE) has fallen 19%, and Atlassian (TEAM) is down 30%. In contrast, the S&P 500 is up 10% and the Nasdaq Composite 11% this year. Analysts say the downturn reflects growing fears that “agentic AI” — autonomous AI capable of coding and building applications — could undermine subscription-based software models.
Key drivers behind the slump include:
- Agentic AI threat: Tools that automate code generation challenge the need for SaaS seat-based licensing models.
- Investor sentiment: Analysts warn of the “death of software due to AI” narrative fueling volatility.
- Competitive pressure: Tech giants like Microsoft and Oracle are embedding AI into business applications, squeezing independent software vendors.
- Strategic missteps: Analysts argue Salesforce and Adobe underestimated the speed of AI’s market impact.
While AI’s threat is real, opinions are divided on whether it will replace SaaS. CFRA Research’s Angelo Zino noted that “the jury is still out,” with opportunities remaining for firms to adapt. Salesforce, for example, has launched its own AI agent, Agentforce, to retain competitiveness.
Some analysts believe AI fears are exaggerated. Jefferies’ Brent Thill argued that AI is a “transformational wave, not a destructive hurricane,” with shortcomings in “vibe coding” limiting its ability to fully replace SaaS.
For now, the uncertainty has rattled investors. But as AI reshapes enterprise applications, the software industry’s long-term future may depend less on disruption and more on how successfully it adapts.
Source:
https://edition.cnn.com/2025/08/25/markets/software-shares-ai-stock
