{"id":38137,"date":"2025-08-26T23:56:00","date_gmt":"2025-08-26T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=38137"},"modified":"2025-11-21T11:18:31","modified_gmt":"2025-11-21T03:18:31","slug":"software-hit-hard-by-ai","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/","title":{"rendered":"Software hit hard by AI"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Software_stocks_once_a_favorite\" >Software stocks once a favorite<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Software_stocks_significant_declines\" >Software stocks significant declines<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Its_happening_to_software_stocks_worldwide\" >It&#8217;s happening to software stocks worldwide<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#SaaS_no_longer_enjoy_high_valuations\" >SaaS no longer enjoy high valuations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#AI_is_a_Real_Threat_to_Software_Companies\" >AI is a Real Threat to Software Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Semiconductors_weight_Overtake_Software\" >Semiconductors weight Overtake Software<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Software_stocks_once_a_favorite\"><\/span>Software stocks once a favorite<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Software hit hard by AI. For years, software companies have been a favorite of Wall Street investment institutions. High profit margins, low capital requirements, and promising growth prospects have driven a long-term bull market in software companies. Software giants like Microsoft and Google have attracted an influx of global capital.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Software_stocks_significant_declines\"><\/span>Software stocks significant declines<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Salesforce, Adobe, and ServiceNow are among the worst-performing companies in the S&amp;P 500 this year, with share prices down at least 16% and their combined market capitalization slashed by approximately $160 billion. Other software stocks, such as Asana, Hubspot, and Bill Holdings, are among the worst performers, with their share prices down at least 29%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Its_happening_to_software_stocks_worldwide\"><\/span>It&#8217;s happening to software stocks worldwide<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The impact isn&#8217;t limited to US companies. Following Monday.com&#8217;s warning, shares of SAP, Europe&#8217;s largest company by market capitalization, and smaller peers like Sage Group and Dassault Systemes also fell.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SaaS_no_longer_enjoy_high_valuations\"><\/span>SaaS no longer enjoy high valuations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Morgan Stanley&#8217;s index of software-as-a-service (SaaS) stocks traded at 23 times expected earnings in Aug 2025. This is half its average over the past decade and the lowest level in Bloomberg data going back to 2014. The Nasdaq 100&#8217;s forward P\/E ratio is just under 27.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"AI_is_a_Real_Threat_to_Software_Companies\"><\/span>AI is a Real Threat to Software Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For many other software companies, the threat is very real, as AI has the potential to disrupt the industry&#8217;s value proposition: providing customers with productivity-enhancing digital tools and charging premium prices. Investors can&#8217;t be sure whether AI will replace all software, but it&#8217;s already making technology obsolete without warning.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Semiconductors_weight_Overtake_Software\"><\/span>Semiconductors weight Overtake Software<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.spglobal.com\/ratings\/en\/regulatory\/delegate\/getPDF?articleId=2943128&amp;type=COMMENTS&amp;defaultFormat=PDF\" target=\"_blank\" rel=\"noopener\">In the two decades leading up to the 2022 market peak, no industry group in the S&amp;P 500 saw its weighting grow as dramatically as that of software and services, from less than 6% to nearly 15.9%<\/a>, even after social and digital advertising companies like Google and Meta were reclassified as &#8220;other sectors&#8221; in 2018.<\/p>\n\n\n\n<p>The software sector&#8217;s weight in the market-cap-weighted S&amp;P 500 is now approximately 12% of the benchmark and has been slightly surpassed by semiconductor companies, which have benefited from surging demand for computing hardware. The software sector&#8217;s weighting would have been even lower if not for the outperformance of Microsoft, Oracle, and Palantir.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Unless they successfully transition, any company relying on older technologies will suffer or be forced to pivot, and you&#8217;ll see this reflected in its stock price. A few software companies, such as Meta and Microsoft, continue to win in the field of AI, but not all software companies can do so.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"180\" height=\"90\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2025\/12\/Software_hit_by_AI-Custom.jpg\" alt=\"Software hit hard by AI\" class=\"wp-image-38148\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/30\/ai-strategy-are-shifting\/\">Tech giants&#8217; AI strategy are shifting<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/20\/oracle-growth-driver\/\">Oracle growth drivers in the future and the biggest investment risk: TikTok US, Data center, AI database<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/26\/ai-jeopardizes-cash\/\">AI jeopardizes cash flow and profits<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/12\/ai-job-openings-tripled\/\">AI job openings tripled in past five years<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/28\/ai-investment-will-increase\/\">AI investment will only increase because no one can afford to miss out on the Fourth Industrial Revolution<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/04\/ai-software-make-money\/\">Some AI software vendors are starting to make money<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/08\/26\/software-hit-hard-by-ai\/\">Software hit hard by AI<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/26\/software-underperforming-ai\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why software underperforming amid the AI craze?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/28\/reddit-making-money\/\">Reddit first profitability sent stock rally 2.5 folds<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/18\/adobe-buy-figma\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why Adobe&#8217;s Figma Acquisition Caused Upheaval<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/16\/the-technological-republic\/\">&#8220;The Technological Republic&#8221;,the only book to understand Palantir<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/04\/value-and-problem-palantir\/\">The value of Palantir, pros and cons of Palantir investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/14\/palantir-introduction\/\">What kind of company is Palantir?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/04\/03\/openai-and-chatgpt\/\">OpenAI, the Generative Artificial Intelligence rising star and ChatGPT<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/08\/deepseek-rout\/\">DeepSeek routed the global AI and stock<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/09\/20\/oracles-oci-ai\/\">Oracle\u2019s cloud computing and AI finally recognized<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/03\/27\/oracle-db-dominator\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does database monopoly Oracle make money? 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I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Software hit hard by AI, seen worldwide, with Morgan Stanley&#8217;s index of software-as-a-service (SaaS) stocks trading this month at 23 times expected earnings. That&#8217;s half its average over the past decade and the lowest level in Bloomberg data going back to 2014.<\/p>\n","protected":false},"author":1,"featured_media":38148,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[122,104],"tags":[328,781,1543,1542,818,446,3,394,339,308,333,1544],"class_list":["post-38137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-software","category-artificial-intelligence","tag-adbe","tag-asan","tag-bill","tag-dastf","tag-hubs","tag-mndy","tag-msft","tag-now","tag-orcl","tag-pltr","tag-sap","tag-sgpyy"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/38137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=38137"}],"version-history":[{"count":20,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/38137\/revisions"}],"predecessor-version":[{"id":40105,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/38137\/revisions\/40105"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/38148"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=38137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=38137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=38137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}