Software business models are under threat, say analysts and investors.
- Most software stocks fell on Tuesday, led by an 11% drop in Intuit’s shares.
- The selloff was partly triggered by Anthropic’s unveiling of new legal tools to automate a range of legal drafting and research tasks.
- Adobe, Intuit, and Salesforce appear to trade at attractive price points, based on their stock moves and P/E ratios.
Software stocks slid sharply on Tuesday, with investors fretting that new and forthcoming artificial intelligence tools may undercut demand for niche software and disrupt subscription-driven enterprise models that fueled the sector’s recent growth.
Accounting software firm Intuit led the declines, tumbling 11%, followed by creative software maker Adobe, which fell 7.3%.
Shares of Service Now, Autodesk, Palo Alto Networks, and Workday dropped between 5.2% and 7%, while those of heavyweights Microsoft and Oracle declined 3% and 3.4%, respectively.
Investors zeroed in on Anthropic’s announcement on Tuesday that it was adding new legal tools to its Cowork assistant, aimed at automating a range of legal drafting and research tasks.
Software stocks felt the pinch when Anthropic debuted Claude Cowork last month; the powerful AI, capable of automating complex tasks such as turning screenshots into spreadsheets and detailed reports from an assortment of notes, reinforced the view that broad-based AI could make many legacy software products less necessary.
AI tools, including ChatGPT and Gemini (Google received wide praise when it released Gemini 3 last November), are growing more sophisticated, enabling users to automate tasks such as document drafting, software development and research analysis, cutting into demand for niche software and, in some cases, human labor.
“Say good bye to long term lock-in, multi year migration projects, expensive maintenance budgets... This is the future of Enterprise Software,” venture capitalist Chamath Palihapitiya said in a recent X post, detailing what he sees as the new enterprise approach to software.
Software investors are taking notice (see the chart below).
The ongoing rout has piqued retail investor interest, with traders looking to snap up quality companies at discounted prices.
“$INTU Truly incredible buying opportunity. Load up!” a user posted on Intuit’s Stocktwits stream.” Another questioned the relevance of Salesforce given the glut of CRM tools in the market.
| Company< | 12-Month Stock Move< | Forward P/E< | Stocktwits Sentiment< |
| Salesforce | -42% | 15.5 | Extremely Bullish |
| Intuit | -28% | 18.3 | Extremely Bullish |
| Adobe | -38% | 11.6 | Bullish |
| Oracle | -5% | 21.4 | Bullish |
| Palantir | 97% | 120.1 | Extremely Bullish |
| Microsoft | 0% | 23.4 | Extremely Bullish |
| Service Now | -46% | 26.4 | Extremely Bullish |
| Palo Alto Networks | -9% | 42.2 | Bullish |
| Crowdstrike | 9% | 92.9 | Bullish |
| Snowflake | -2% | 120.4 | Extremely Bullish |
| Datadog | -15% | 53.7 | Bearish |
| Autodesk | -22% | 21.7 | Bearish |
| Workday | -38% | 15.8 | Bearish |
| Cadence Design System | -8% | 34.9 | Bearish |
| Synopsys | -18% | 29.1 | Bullish |
Source: Koyfin, Stocktwits<
In the best of the top 15 software companies, Service Now and Salesforce have declined the most in the past year. Adobe, Workday, Intuit and Salesforce have the lowest forward price-to-earnings ratios (under 20) in the group.
Growth is not accelerating in software, but accelerating in AI-exposed sectors, reducing software's leadership status. Fear, not fundamentals, is driving the sell-off, William Blair said, according to a report in Seeking Alpha.
Jefferies analyst Samad Samana highlighted ServiceNow, Shopify, and Twilio as standout stocks in the beaten-down sector.
Based on stock moves and P/E, Adobe, Intuit, and Salesforce appear to trade at attractive points.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
