Nvidia’s Jensen Huang was right when he told CNBC investors that he was “misinformed” that concerns about AI led to a selloff of software stocks, market participants said. Software stocks have been caught in a slide amid fears that AI will make software-as-a-service (SaaS) obsolete, dragging the sector into bear market territory. It’s called “Saaspocalypse.” Speaking to CNBC’s Becky Quick after the chipmaker’s earnings call on Wednesday, NVIDIA’s CEO said investors are overestimating the impact AI will have on the industry. “I think the market got it wrong,” Huang told Quick, calling the decline “counterintuitive.” He added that AI agents will not replace traditional software tools such as internet browsers or Microsoft Excel, but will “use these tools on our behalf and help us be more productive.” “I think he’s right,” Sidi Job, senior portfolio manager at Econopolis Wealth Management, told CNBC’s “Squawk Box Europe” on Thursday. “The tools are there, and they’re going to be used more and more because they’re powered by AI. Companies like Salesforce and ServiceNow, where people didn’t pay before, now they’re more efficient, so people will pay.” Salesforce stock fell after its fourth-quarter results on Wednesday, dropping 4% ahead of Thursday’s opening bell. ServiceNow, which Huang called a leader in service software in an interview with CNBC, was most recently trading up about 0.9%. But Jobs cautioned that “not all companies are created equal.” “We’re going to buy what I call AI infrastructure software,” he said, describing these as software vendors that help AI developers train and improve their models. “It’s right that they should be brought up at this point,” Jobe said, citing US companies Snowflake and Datadog as examples. Neil Shah, vice president of research and co-founder of Counterpoint Research, told CNBC on Thursday that “the market was partly wrong” about the software withdrawal. “There is cannibalization happening, and this is a pivotal moment for SaaS companies to shift their business models. Service-based models are now the norm,” he said, adding that SaaS companies will move from service-based models to outcome-based models as they start deploying AI agents. “For many of these SaaS companies, that transition has to happen quickly, (and) the first ones to do it are going to capture the lion’s share of the market in this particular era, especially over the next two years,” he said. Mitchell Green, founder and managing partner of Lead Edge Capital, agreed with Huang. “Legacy software companies are going to work on new software whenever there’s a period of disruption,” he told CNBC’s “European Early Edition.” “There will be legacy software companies, and they will compete with a new breed of incumbents. Some incumbents and some startups will win. Sometimes the legacy companies will usurp them. But remember, IBM is still selling the mainframes it started in the 1950s.” Earlier this week, HSBC analysts said in a note that software will greatly benefit as AI becomes mainstream. “Software is already eating up AI,” they say. “Although AI has benefited the hardware/semiconductor sector, we believe the majority of that value is being created in the software sector, which has been planning and building agent AI for the past two years, with kickoff starting in 2026.” Pre-market trading on Thursday saw a mix of many big software names. Intuit was slightly higher, but Microsoft was down 0.3%. Shares of Cisco and CrowdStrike fell about 0.5%. HP rose 0.7%, CoreWeave rose 0.3% and IBM stock rose 0.7%. Nvidia rose nearly 1% on Wednesday after reporting better-than-expected results, while German software giant SAP rose 0.9% in European trading.
