Artificial intelligence problems in the software industry don’t seem to be going away anytime soon, following the industry’s decline following Anthropic’s latest product and earnings update. Software prices have continued to fall this week, with the iShares Expanded High-Tech Software Sector ETF (IGV) falling on Wednesday, when much of the market was participating in the rally following President Donald Trump’s ceasefire announcement, and falling again on Thursday. IGV has fallen more than 4% since the beginning of the week. Some stocks, like Workday and Intuit, have fallen more than others, falling more than 15% this week. The uproar comes after Anthropic revealed this week that its revenue run rate is now more than $30 billion, up from $9 billion at the end of 2025. The company also rolled out the latest updates to its agent tools, including Claude Managed Agents, which reduce the time it takes developers to build their own agents. This has once again raised fears that the age of AI in software is upon us. IGV 5D Mountain iShares Expanded Technology Software Sector ETF (IGV) in the Past 5 Business Days “That artificial update was staggering,” Ben Reitzes, head of technology research at Melius Research, wrote in a note Wednesday, referring to the earnings run rate. “The exponential rise you see below stems from the launch of software being tokenized to replace and augment a workforce (total addressable market) of roughly tens of trillions. That’s the first time. And for your stock to work, your story has to match this exponential.” “The market is responding well in SaaS,” Reitzes continued, referring to “software as a service.” “Anthropic was valued at just $18 billion in January 2025, giving it a SaaS market cap of 1.4 No platform is safe even if you lose trillions of dollars.” The software industry has come under pressure this year due to concerns that agent AI will make the traditional software-as-a-service model obsolete, with IGV down more than 35% from recent highs and 28% in 2026. But researchers worry that Anthropic’s future earnings forecasts may not yet factor in the full scale of the disruption. Reitz predicts that workflow automation could also hurt large companies like members of the Magnificent Seven. Microsoft, for example, will have to show it can succeed in building its frontier model, given that its 365 product is at risk of inevitable layoffs among white-collar workers, he said. Reitzes added that while Amazon’s retail business could be threatened by agent AI, Meta’s AI strategy also competes with Anthropic’s. Investors who expect software to have already bottomed out are scouring the market to pick the companies best positioned to emerge as AI winners, as many believe the recent offering was indiscriminate. But some are comfortable staying on the sidelines for now until it becomes clearer that the software has changed direction. “I’m pretty confident that not every software company will be a loser, but I’m also confident that there will be a lot of losers,” said John Belton, GGRWETF portfolio manager at Gabelli Funds. The portfolio manager said he will keep software exposure low until sentiment starts to stabilize or shows signs of bottoming out. In the meantime, the obvious beneficiary of AI may continue to be hardware, similar to semiconductors, rather than software, Reitzes says. The VanEck Semiconductor ETF (SMH) has significantly outperformed this week’s rally, soaring more than 9% as of Thursday. “SaaS should be avoided,” Reitzes wrote on CNBC. —CNBC’s Gabriel Cortez contributed to this report.
