What’s Behind the ‘SaaSpocalypse’ Plunge in Software Stocks

Since ChatGPT arrived on the scene some three years ago, analysts have been warning that entire industries, including software programming, legal services and film production, are at risk of being disrupted by artificial intelligence.

But it took a wave of disappointing earnings reports, some improvements in AI models, and the release of a seemingly innocuous add-on from AI startup Anthropic to suddenly wake up investors en masse to the threat. The result has been the biggest stock selloff driven by the fear of AI displacement that markets have seen. And no stocks are hurting more than those of software-as-a-service (SaaS) companies.