"The market is overestimating AI's impact on the software industry. AI Agents will not replace traditional software tools but will instead 'use these tools on our behalf' to enhance productivity."
Jensen Huang, CEO of Nvidia, told CNBC amid concerns over SaaSpocalypse—the investor fear that AI Agents will replace software businesses—which triggered heavy sell-offs in software stocks. Recently, several analysts have expressed views aligning with his.
Recently, software stocks have plunged sharply, leading analysts to view the market as entering a bear phase due to investor worries that AI will obsolete Software as a Service (SaaS)—the current primary cloud subscription model for enterprise software. This phenomenon has been termed "SaaSpocalypse" or the demise of SaaS
SaaSpocalypse is a new term combining 'SaaS' with 'Apocalypse,' meaning catastrophe or end of the world, thus referring to the collapse of SaaS.
Particularly, the buzz around Anthropic's recent launch of Claude Cowork, an AI Agent capable of performing multiple tasks autonomously within organizations, shocked software stocks amid fears that such AI tools would upend traditional software businesses.
However, Jensen Huang expressed an opposing view to the SaaSpocalypse narrative, stating that the market is greatly overestimating AI's impact on the software industry. The market is misunderstanding, and he called the sell-off “irrational.”
Huang explained that AI Agents will not replace traditional software tools like web browsers or Microsoft Excel but will “use these tools on our behalf” to improve work efficiency.
According to CNBC, last Thursday software stocks showed mixed movements in pre-market trading: Intuit rose slightly, Microsoft fell 0.3%, Cisco and CrowdStrike dropped about 0.5%, while HP gained 0.7%, CoreWeave 0.3%, and IBM jumped 0.7%.
Nvidia rose nearly 1% after reporting better-than-expected earnings, and German software giant SAP increased 0.9% in European markets.
Beyond Jensen Huang, many investors and analysts share the view that AI Agents are not destroying software businesses.
Siddy Jobe, senior portfolio manager at Econopolis Wealth Management, commented, “I think he is right,” adding that software tools will remain and be enhanced by AI, leading to increased usage.
Especially for companies like Salesforce and ServiceNow, where previously some customers were reluctant to pay more, AI-driven efficiency improvements will encourage greater customer willingness to pay for added value.
However, Salesforce's stock dropped 4% before Thursday’s market open following Q4 earnings, while ServiceNow, which Huang once called a leader in service software, rose about 0.9%.
Neil Shah, vice president of research and co-founder of Counterpoint Research, offered the view that the market may be partly mistaken and should not broadly sell off software stocks.
He noted that traditionally, SaaS business models charge based on services provided, but going forward, companies will need to shift to outcome-based pricing as AI Agents are deployed.
“This transition must happen quickly. Those who do it first will capture the largest market share in the coming era, especially over the next two years,” said Neil Shah.
HSBC analysts stated in a report earlier this week that software companies will be the main beneficiaries as AI becomes mainstream. They noted, “Software is already consuming AI.” Although hardware and semiconductors have thus far profited significantly from AI, most value creation will occur in software.
HSBC believes software companies have been planning and developing Agentic AI over the past two years and will begin seeing clear real-world applications in 2026.
Source:CNBC
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