Forgot your password?
Close
typodupeerror
AI

As Software Stocks Slump, Investors Debate AI's Existential Threat (reuters.com) 55

Posted by msmash from the how-abut-that dept.
Investors were assessing on Wednesday whether a selloff in global software stocks this week had gone too far, as they weighed if businesses could survive an existential threat posed by AI. The answer: It's unclear and will lead to volatility. From a report: After a broad selloff on Tuesday that saw the S&P 500 software and services index fall nearly 4%, the sector slipped another 1% on Wednesday. While software stocks have been under pressure in recent months as AI has gone from being a tailwind for many of these companies to investors worrying about the disruption it will cause to some sectors, the latest selloff was triggered by a new legal tool from Anthropic's Claude large language model (LLM).

The tool - a plug-in for Claude's agent for tasks across legal, sales, marketing and data analysis - underscored the push by LLMs into the so-called "application layer," where these firms are increasingly muscling into lucrative enterprise businesses for revenue they need to fund massive investments. If successful, investors worry, it could wreak havoc across a range of industries, from finance to law and coding.
This discussion has been archived. No new comments can be posted.

As Software Stocks Slump, Investors Debate AI's Existential Threat More

As Software Stocks Slump, Investors Debate AI's Existential Threat

Comments Filter:

  • What's the problem (Score:5, Insightful)

    by bugs2squash ( 1132591 ) on Wednesday February 04, 2026 @02:16PM (#65968942)

    I think they are complaining that AI might be highly effective, but I think the risk is that AI proves to be broadly ineffective and it's been a waste of so much resource.

    If AI is effective and truly disruptive then it will take time, but humanity will adapt and we'll be better off for it

    If it proves to be as disruptive as blockchain then we wasted a lot of carbon

    • If it proves to be as disruptive as blockchain then we wasted a lot of carbon

      Disruptive? The average human, still uses their fiat currency. To 100% effectiveness. The average human, has no fucking idea what blockchain even is, much less what it could potentially deliver.

      Yes. It's true. Ask 100 people about "blockchain" to confirm yourself. Tell me how many vendors that currently sustain your existence even accept shitcoin as payment. Tends to say a lot about "mass" adoption.

      We wasted a lot of carbon doing the shit-effort required to justify "value" in the shitcoin world, whic

      • If you read his full comment and appreciate the context in which it was written, then he's claiming that if AI has the same impact as blockchain then all this was for nothing; by extension he's saying blockchain did nothing of value either.

  • Now is the time (Score:3)

    by dskoll ( 99328 ) on Wednesday February 04, 2026 @02:19PM (#65968946) Homepage

    If you're in it for the long term, now's the time to buy software stocks, I guess.

    • ...as long as they aren't one of the companies that bet the farm on AI...

      Those companies will never recover. On the plus side, Windows 12 can't be any worse than Windows 11 if Microsoft died before Windows 12 was released.

      • Re: (Score:2)

        by dskoll ( 99328 )

        Yes, I meant traditional software companies that produce software and not vibe-coded vulnerability-ware.

      • Gaming stocks dumping after google showed off their latest image-generator-on-meth shows how much investors understand about this stuff.

      • Re: (Score:2)

        by gweihir ( 88907 )

        ...as long as they aren't one of the companies that bet the farm on AI...

        Those companies will never recover.

        Yep. They lost so much key personnel and so much institutional knowledge that they are pretty much dead. And everybody will remember who they are, so they cannot even re-hire from the higher skill levels. Only the desperate will want to work for them.

    • "risks including competition from AI-native firms and clients building their own solutions in-house"

      Apparently investors think the software companies could be overtaken permanently.

    • Re: (Score:2)

      by Junta ( 36770 )

      Well, it depends...

      Whether or not LLM does eat the lunch of some of those vendors, merely the activity of spinning up efforts to prepare and evaluate a migration is a threat of disruption. A lot of these software companies lean on the lockin and provide crappy service but retain customers by sheer reluctance to migrate.

      If the customer base is stirred up enough to be ready for a migration, overcoming the lock-in, they may land in another place, either LLM works as promised or it doesn't but competition can b

  • It's as useless as the average human (Score:3, Interesting)

    by RobinH ( 124750 ) on Wednesday February 04, 2026 @02:25PM (#65968964) Homepage

    I've been frustrated by AI constantly making shit up and stating things as fact when it's clearly wrong. But then I realized if you read around the internet that it's full of posts that are just factually untrue. Like I'm not talking about opinion stuff... I mean people posting absolutely untrue "facts" even on technical forums where a very cursory google search with turn up multiple independent sources that show they're completely wrong.

    So, it turns out that if you can make a program that's only correct 90% of the time, you've already created a program that's correct more often than the average employee, so it's probably useful. This is completely backwards to how I think about computers, but I can't deny it. Humans are just a lot less useful than I thought, particularly if you need them to make correct decisions.

    • Re:It's as useless as the average human (Score:5, Informative)

      by dskoll ( 99328 ) on Wednesday February 04, 2026 @02:32PM (#65968978) Homepage

      The problem is, most people have learned to have a bit of healthy skepticism about what humans say and produce, whereas a lot more people accept anything an AI program says without any questioning.

      • The problem is, most people have learned to have a bit of healthy skepticism about what humans say and produce, whereas a lot more people accept anything an AI program says without any questioning.

        The computer clergy have been promoting the idea of computer perfectionism since long before AI started being batted around by the corporate types like a kitten plays with a ball of yarn. And once AI started to get bandied about in public, the computer clergy added a new branch to their kind, the AI prophets, determined to promote the idea of computer god among the masses. And way too many people that should know better are falling for it.

        • AI is antithetical to "computer perfectionism". A normal computer is perfect in its mathematical calculations, assuming it's not damaged. Normal computing is deterministic. AI has (among other things) a random number generator at its core. It will produce different outputs, randomly, for the same input. Certainly not "perfection".

          • Re: (Score:2)

            by allo ( 1728082 )

            Every heard about floating point numbers? Or the Pentium bug? Things may be deterministic, but they are not perfect.

            "AI has (among other things) a random number generator at its core. It will produce different outputs, randomly, for the same input. Certainly not "perfection"."

            That wrong on so many levels. First you use the term AI, which is a huge field in which many thing have nothing to do with random numbers at all. Let' be fair and put LLM there. Then you assume a LLM must be sampled stochastically, whi

            • The logic is perfect as long as you understand what it actually is. If you assume a floating point can be any real number that's your own failing, not the computer's.

              • Re: (Score:2)

                by allo ( 1728082 )

                It is perfect, useful, for most people to understand and a leaky abstraction. In addition it already lead to a lot of dangerous issues and will continue to do so in the future. We also don't have any better option due to how current computer hardware works.

                It would be really interesting to do floating point computations on a device that is not binary. If you've had a seamless voltage instead of on and off and can do computations with it, you're much closer to the real numbers.

    • If I search for what type of oil to use in my car, there will be pages and pages of forum posts of people bickering about who's wrong answer is the best. ChatGPT gets it right the first time, and that's amazing considering it's trained on so many wrong answers. And I'd say its WAY more than 90% accurate.

      • The oil specified for your vehicle by the manufacturer might or might not be the best thing to put in it. You didn't give us enough information to know if that fact is relevant, but since it might be, I put that here.

        I am not talking about brands here either, if you do changes on schedule that is mostly irrelevant. I mean some vehicles are better run with a different weight than specified, usually due to engineering failure.

    • Re:It's as useless as the average human (Score:5, Insightful)

      by JaredOfEuropa ( 526365 ) on Wednesday February 04, 2026 @03:24PM (#65969064) Journal
      "So, it turns out that if you can make a program that's only correct 90% of the time, you've already created a program that's correct more often than the average employee, so it's probably useful."
      It depends on what you're doing with it. If you're looking for facts and look around the internet yourself, you usually get a pretty good idea of how trustworthy the source is. But an AI makes truth and the worst nonsense look and sound equally authoritative, and that's how most people take its answers.br But if you're using it as a helpdesk, it's probably fine. It's a good application of AI, as it can do both 1st and 2nd line support, and if it is able to help people 90% of the time, that's not too shabby.
      • AI is also burning the bridges behind it. Authoritative sources are losing revenue from visitors and keep getting hit by crawlers. It's enshittification all the way down.

      • Re: (Score:2)

        by CAIMLAS ( 41445 )

        "If you're looking for facts and look around the internet yourself, you usually get a pretty good idea of how trustworthy the source is. "

        Until you learn that sites like wikipedia have been actively gatekept by powerful moneyed interests, that "trustworthy" media sources like the New York Times has been run by state intelligence aparatai since the 1940s, and that the cultural indoctrination received in public schools has been carefully manufactured for 70 years.

        If your first beliefs are wrong, you're not go

    • Having just spent a few days butting heads with an outsourced customer service call center, I can't disagree. These people repeatedly hallucinate facts, deny facts already in evidence, and contradict each other. When I point this out (it's all in writing) they simply ignore what I say and repeat the behavior.

      If you replaced all those people with AI, there would be problems, but maybe not worse or even fundamentally different problems.

    • Yes, AI simply reflects general human ignorance and that all businesses creates slop.

    • Re: (Score:2)

      by gweihir ( 88907 )

      Not better than the average employee. Better than the average random incompetent on the Internet. The thing is, people will usually not be made to work in areas they are incompetent in, unless they are "managers".

      You are correct that a lot of average people have swollen egos and miniscule skills. The utter nonsense these people will claim is staggering.

  • SaaS has always been a shady business model. Now AI has experts as the only people left doing anything with building new Software, at a massively hiked productivity that still is rising almost by the week. And since AI does not care if it's working on FOSS or proprietary Software - it's actually more likely to deliver for FOSS, since FOSS documentation isn't hidden behind a paywall and can easily be processed by LLMs - experts will be using AI to work on FOSS, because they've long since come to love the adv

  • This index of companies is down, yes. But each company on that index is down (or up) for different reasons.

    Oracle, for example, is down in part because of the huge exposure it has to an AI bubble.
    Salesforce, likewise, has invested huge amounts of money and marketing on its AI gamble, which might well not play out as they hope.
    Fair Isaac, which doesn't have an obvious reason to be in a software index, and which isn't apparently highly exposed to risk from AI, is just down to where it was in September of las

  • At this point every stock slump is a good thing (Score:4, Interesting)

    by hdyoung ( 5182939 ) on Wednesday February 04, 2026 @02:46PM (#65969004)
    Recessions happen with the regularity of a heartbeat, and we're right in the spot on the curve where a downwards slope is expected. Stocks are stupidly overvalued at the moment. It's time for a recession aka a-badly-needed-splash-of-cold-water-in-the-face. If we engage in all sorts of shenanigans to put it off, it'll just build up trouble and make the eventual recession worse.

    2 hours of partying is fun and a slight hangover. 12 hours of partying means 3 days of recovery and permanent liver scarring. The current stockmarket party is well past the 2 hour mark and getting into the stupid zone. Time for a small recession.
    • A recession is a consequence of money having too many places to go, of being spread thinly: With the USA turning into a stocks and bonds wild west, there's plenty of places to park money. So, yes a recession should be happening. But the wild west is creating a chain reaction, similar to a pricing bubble (where money is too concentrated). It's more like a snake eating its own tail, because the fixation is on the GDP (and thus the price), not the long-term goods being exported (software, music, movies, bo

  • Investors are kinda crazy (Score:5, Insightful)

    by MpVpRb ( 1423381 ) on Wednesday February 04, 2026 @02:55PM (#65969018)

    They are a bit like fortune tellers, trying to not only predict an increasingly unpredictable future, but trying to predict what other investors will do
    It's like a casino for the insane

  • This is what we asked for... (Score:3)

    by ScooterBill ( 599835 ) on Wednesday February 04, 2026 @03:23PM (#65969058)

    As a society, we cannot create disruptive technologies and not expect disruption.

  • When I look around my industrial estate, full of fabricators, tool suppliers, hydraulics, hardware, car repair, pipe extrusion, specialist bakeries and printers, you know, where real life happens outside the tech bubble, I can assure you AI will have zero impact for the foreseeable future. The main use I see so far, is a better search engine.

    • Just imagine a group of Allen-Bradley robots with welders as end-effectors and machine vision, controlled by an LLM-AI of some sort. Goodbye welding job (you say that's only stationary... what prevents them from having one on a trailer?).
      Specialist bakeries? So, a robot could never pump out icing perfectly to say 'Happy Birthday' or bake a loaf of sourdough?

      In the near future, all of that will be automated completely... why pay someone an hourly wage to screw something up, when you can have a robot do it

    • Re: (Score:2)

      by CAIMLAS ( 41445 )

      You're not looking hard enough.

      I know a college kid who's in the midst of making a fully open source milling machine and their objective is to make it something that can be made without machine tools (eg. no/minimal machined parts). It currently works and can mill aluminum and mild steel. He's 22. I know of several similar stories.

      The local "startup incubator" company that's been in business for 8 years that gets grant money is now in shambles and can't find any customers, because people are able to complet

  • Sure, it might fuck up the biosphere and ultimately kill humanity, that's cool. But look, now we're talking real problems. It might cause a minor disruption for Wall Street! SOMETHING MUST BE DONE!

  • No, Nvidia will not die if OpenAI considers if there are also other graphic card companies. No, a proof of concept world model will not create games on its own. Sometimes one thinks people investing at the stock market don't have *any* idea about what the companies actually do when buying the shares.

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      On the other hand, any of the LLMs are pretty decent at making web forms. Good enough you might be tempted to make your own instead of paying Peoplesoft or Salesforce a monthly fee to do it for you. Or maybe a few friends get together and make something customized for your specific niche and charge a fraction of what they do.

    • Investors who think software is "writing code" are the problem. AI doesn't help with the difficult problems in code development, customer requirements.
  • ... you will always find the cover-your-ass sentence "Results need to be checked by a trained professional". And of course everybody knows this is exactly what will not happen, as it would contradict the purpose of those bots to replace costs for trained professionals. So the inevitable result of using those "expert" plug-ins will be a lower quality of the results, at an (at least at first) lower price. And maybe even some Investors realize what a bleak future this foretells.
  • The middle-men are complaining, the first wave of AI is unpredictable and they will lose money. They will move their money out of the obvious threats, OpenAI, Anthopic, etc.

    Here, they are pondering, if writing can be automated by a machine, as promised. If everyone can produce their own software, the demand for commercial software will disappear. They are trying to put a price on that. Then, they need a new place to park their money. But which businesses won't lose employees and profits from the spre

    • Don't worry... the off-shore accounts are fully stacked with all the money you could imagine.
      That's all the C-suite guys care about.

  • If the mad race to create superintelligent AI continues then it is human existence we will need to worry about, not financial viability of some companies.

    • The day a human-level AI is created is the day we all become utterly pointless. Not that life isn't already pointless if you think to much about it, but right now we have some things we can do that entertain us, we can indulge our nicer social primate instincts and share those things with friends, etc.

      Give an AI a humanoid robot body and it's much more robust than we are, can pick up any skill and be better at it than any human, and could even be better at everything than all humans. It'll even be a bette

      • I, Robot comes to mind. As does Blade Runner.
        Remember the human blobs in Wall-E? Give us 20 years, and we'll get there.

  • Retired so don't need it any work and don't need it to help on other things. Big companies just trying to force it's usage !

Slashdot Top Deals

In 1869 the waffle iron was invented for people who had wrinkled waffles.

Close