Close Menu
    Wall Street

    Is the “Software Sell-off” a rational correction or just AI-induced panic? 📉🤖

    I’ve been looking closely at the recent dip in the software sector (with the MSCI Software Index down nearly 20%+), and I’m calling it: The rumors of the "SaaS Death" are greatly exaggerated.

    While the market is pricing in a massive disruption by AI-native startups, it’s overlooking four fundamental truths that favor the incumbents:

    1. "Vibe Coding" vs. Enterprise Reality 🏗️

    Sure, you can "vibe code" a slick frontend in minutes today. But enterprise software isn't about UI—it’s about complex integrations, legacy data silos, and non-negotiable security protocols. You don't just "prompt" your way into replacing a global ERP or CRM system overnight. The "moat" of complexity is real.

    1. New cheap competitors:

    I don’t see new AI startups winning the "Trust War" anytime soon. Large organizations don't just buy code; they buy reliability, brand reputation, and accountability. When it comes to sensitive corporate data, a CTO will choose a vetted partner like Salesforce or ServiceNow over a "move fast and break things" AI startup every single time. You can't vibe-code a decades-old relationship. This companies alao have trust, brand Reputation and a working sales team which new cheap AI products will not have.

    1. The In-House Trap: AI makes it possible, but not cheap 🛠️

    The common counter-argument is that companies will just build their own tools in-house using AI. While AI does lower the barrier to building, the Total Cost of Ownership (TCO) remains the killer. Building a custom CRM is one thing; maintaining it, securing it, and keeping up with the rapid pace of AI innovation is another. For most enterprises, a specialized SaaS tool remains significantly cheaper and more efficient than a bloated in-house project even with the use of AI.

    1. The Efficiency Dividend & AaaS (Agents as a Service) ⚡💰

    Software giants are their own best AI customers, seeing massive internal margin expansion by using AI in their own dev cycles. Simultaneously, they are upselling. By layering AI Agents and "Token-based" features on top of existing seats, companies like ServiceNow and Palantir are effectively raising their ARPU (Average Revenue Per User) right now.

    The 3-4 Year Horizon:

    Will AI cause structural problems eventually? Possibly. But in the short term? I expect these companies to beat expectations in the upcoming earnings calls and head back toward All-Time Highs (ATH).

    Bottom line: The current panic feels less like a fundamental shift and more like a massive "Buy the Dip" opportunity. (Not financial advice, of course! 😉)

    For me I bought Service Now, Autocut, Hubspot, Saleaforce, Uber, Lyft, Unity etc.

    But also shortet Adobe as I think they would really be losing.

    Is the “Software Sell-off” a rational correction or just AI-induced panic? 📉🤖
    byu/DepartmentTiny4470 inwallstreetbets



    Posted by DepartmentTiny4470

    29 Comments

    1. Tight-Plastic7877 on

      Fuck you reddit for giving out information to DHS. Go fuck yourselves. But you would have to take trumps dick out your ass first. Instead of reading articles while I poop I’m going to post this everywhere. I recommended anyone who isn’t a boot licker or coward to do the same. Flood the website with this. They are turning us into the people who are murdering our own people in the streets. 

    4. Ok_Spring_1212 on

      This is actually pretty solid analysis but I think you’re maybe too optimistic about the timeline. Enterprise sales cycles are slow but once AI tools get good enough, companies will start testing them in smaller departments first

      Your point about trust is spot on though – no way a Fortune 500 company is gonna risk their customer data on some 6 month old AI startup. The compliance requirements alone would kill most of these new players

      Curious why you shorted Adobe specifically when they seem to be adapting faster than most with their AI integrations

    5. mulletstation on

      Wow this is a major breakthrough, I think you’re really onto something. Would you like me to recommend some additional queries to submit?

    9. PaperHandsTheDip on

      This is copium imo.

      > Sure, you can “vibe code” a slick frontend in minutes today. But enterprise software isn’t about UI—it’s about complex integrations, legacy data silos, and non-negotiable security protocols. You don’t just “prompt” your way into replacing a global ERP or CRM system overnight. The “moat” of complexity is real.

      Hate to break it to you – but it’s not actually about the complex integrations. Nobody really cares about that. It’s about you’re ability to deliver products – which vibe coding made 1000x easier. You said it yourself – you can vibe code a slick frontend in minutes. You can vibe code an entire working product in hours. Put a strong engineer in charge of it – and it ***works***. The game has changed – it’s no longer your ability to produce clean, error free code that is valuable. That skill drastically diminished in value – which is being reflected in SaaS companies valuations. The value is your ability to quickly prompt the agents so they produce the product for you & you’re ability to verify correctness of it. If incorrect – tweak it a time or two and you just produced the same product, but 10x quicker.

      AI has made strong engineers 10x more efficient – I’m seeing it in my peers. Those engineers knew how to do the complex integrations, etc. But now they can get the AI to write it for them, and just verify correctness. They just no longer have to do it all by hand…

    13. FinancialTitle2717 on

      I don’t believe someone will just vibe code another version of photoshop or SalesForce.

    17. fire_alarmist on

      Its being used as a scapegoat and a reason to lay off all the high earning software jobs so they can hire better people at 5x lower salaries during this upcoming drawdown. The one thing the rich absolutely fucking HATE is when poor people are hard to replace and can increase their social standing through work. The 400k+ coding jobs are actually infuriating to them, they want everyone wage slaving with no chance of ever making it.

    18. manofjacks on

      Everytime the stock market peaks out, reddit/internet/media needs a narrative as to why it’s topped out. But lets not forget, last year SPY peaked at 612 prior to the April 2025 tariff low when it hit 480 something in April. Then it literally rocketed up to almost 700 by the end of 2025. So lets all, take a breath, take a step back here, and just let things correct themselves without preaching an AI bubble, or a stock market crash, or the end is here.

    20. cookingboy on

      You mean you can’t just hire some kid off the street for $20 an hour to vibe code multiple mission critical enterprise software for your entire company that will have enterprise grade SLA and support?

      You mean I can’t just pay $200 for a Codex/Claude subscription and type a few prompts and get my own version of Microsoft Exchange and SalesForce?

      You mean HP/Dell can’t just ask AI to code them a fully functional operating system that is fully compatible to Windows applications without the need to pay for Windows licenses?

      I’m not even an “AI is totally useless and overhyped” Redditor. I do think AI will be disruptive and some small business targeting SAAS companies will run into more competition and there will be some margin hits, but the market is reacting like the above scenarios are the inevitable future going forward.

      It’s so fucking dumb, as if people forgot that SAAS became mainstream not because the software part (it has existed for decades before), but the *service* part.

    21. browhodouknowhere on

      If you take a bunch of information and ask AI to summarize fine. Stop making it draft your opinion

    24. xjcln on

      I think if you think about the long-term software companies may be cooked. In the short to medium term I think they will be fine, especially the software companies whose main customers are other businesses and not individuals.

      If you run a medium to large business you are not going to want to roll the dice on untested vibe-coded software that may have major security risks when your existing solution works well and your staff all already know how to use it. IT expenditures as a whole are only about 6% of a typical business’s budget, and that includes IT staff and hardware in addition to software costs, so while you may cut some costs, is cutting maybe 2% of your budget worth possibly your whole business being hacked, or adopting software with questionable reliability?

      New customer adoption may weaken however if more competition enters the market. I don’t think we are going to see a world anytime where businesses just do their own software solutions in-house using AI, but it does feel correct that AI makes the entry cost into the enterprise software market significantly lower.

    25. banaca4 on

      If they keep clients with only one employee and make gazillions in profit yes it’s irrational. But who knows

    28. mediocrates012 on

      Framing it as in-house Vibe Coding vs Enterprise SaaS is the wrong comparison. There are two reasons Software will be worth less.

      Software historically gets outrageously high valuation multiples, because it’s presumed they can retain a customer for 15 years. Customers’ data is trapped so switching costs are high. Employees learn the software and switching vendors means forcing employees to adopt a new system. Incumbents have spent years building an advantage in code and features.

      AI threatens all those assumptions. AI is great at migrating data from one database to another. New software companies can code extremely quickly and cheaply, so they can both catch up to a feature set, and also focus on a niche where they can excel. And in a far flung future (maybe 3-5 years out?) a lot of work might be done by AI agents, who can easily adopt a new system of a competitor software provider.

      The second threat is when AI coding copilots make it possible for 10 SaaS companies to all deliver identical value. If software becomes more commoditized then software companies won’t be able to drive high profit margins.

      For example I pay like $3500 per year for Salesforce. If the cost to code drastically drops, I might find 5 CRMs that all do the basic functionality (which is all I need anyway). I will pay $350 per year to a Salesforce clone that’s actually quite good.

      Software isn’t going away. But will it forever lock in 10x revenue multiples? Probably not.

    Leave A Reply
    Share via