American enterprise software stocks have taken a hit, losing about 10% of their value over the last year. Economist published a piece on this. "The carnage reflects growing nervousness over the future of the software industry in the age of artificial intelligence. " On January 29th SAP fell 15% and ServiceNow fell 13% Official data show business-software investment growth slowed from 12% in 2021-22 to 8% in 2024. The AI fear has 2 channels, coding tools that enable more in-house builds and AI-native startups that sell versions of old workflows. Because business logic is moving from the software application to the AI agents. Currently, you buy software for its specific features and rules. 'A recent paper by Fiona Chen and James Stratton of Harvard University examined the productivity of programmers using AI, and found that it resulted in an increase in output (measured by the number of tasks completed) only for those at companies selling software.' This story argues the market is pricing an AI disruption that looks smaller than a normal macro slowdown. If AI lowers software build costs while incumbents bundle features into sticky suites, spending can rise even as unit prices fall. --- economist. com/business/2026/02/01/why-software-stocks-are-getting-pummelled
