Are Investors Panicking, Or Spot On, Over AI Threat To Software Makers?

• Anthropic's Cowork automates knowledge worker tasks independently, targeting functions currently served by collaboration and productivity software companies, intensifying competitive threats from AI labs
• Software stocks have struggled despite favorable macro conditions (tamer inflation data), as companies fail to generate meaningful AI-related revenue and face risks to 'per seat' licensing models if AI eliminates jobs
• Analysts like William Blair's Bhatia argue fears are 'overstated' and disruption will mainly affect point solutions rather than mission-critical enterprise systems, though RBC warns headline risk may persist throughout 2025

Summary: AI Threat Pressures Software Stocks

Key Developments

Software stocks are underperforming in 2025 as Anthropic's launch of "Cowork" (Claude Code for knowledge workers) triggered sharp declines across the sector. Major casualties include Atlassian (TEAM, -18% YTD), ServiceNow (-12%), Salesforce (-10%), Workday (-10%), and Snowflake (-6%). Palantir Technologies has bucked the trend, gaining 6% in 2025 after a 135% surge last year.

The AI Competitive Threat

Anthropic's Cowork represents an automated AI assistant capable of handling tasks independently—reorganizing files, creating spreadsheets from screenshots, and drafting reports. This follows OpenAI's enterprise push, intensifying investor concerns that AI companies like Anthropic and OpenAI will disrupt traditional software vendors.

Analyst Perspectives

William Blair analyst Arjun Bhatia believes fears are "overstated," arguing that while point solutions and non-critical tools face disruption, mission-critical systems remain relatively safe. However, RBC Capital's Rishi Jaluria warns that "the velocity of innovation and announcements from model providers could continue to weigh on the broader software landscape throughout 2025."

Market Implications

Beyond competitive threats, investors worry about the traditional "per-seat" licensing model—if AI improves productivity but eliminates jobs, software companies could see reduced license revenue. Additionally, software firms have struggled to generate meaningful AI-related revenue growth. Despite favorable macroeconomic conditions (tamer December CPI boosting Fed rate cut hopes), software-as-a-service stocks continue declining, suggesting structural concerns outweigh monetary tailwinds.