Software’s artificial intelligence troubles don’t appear as though they will let up anytime soon, following the sector’s slide after Anthropic’s latest product and revenue updates. Software is down again this week, with the iShares Expanded Tech-Software Sector ETF (IGV) falling Wednesday — when most of the market participated in a sharp rally following President Donald Trump’s announcement of a ceasefire — and then again on Thursday. The IGV is down more than 4% week to date. Some stocks suffered more than others, like Workday and Intuit which are both down more than 15% this week. The tumult comes after the Anthropic disclosed this week that its revenue run rate now tops $30 billion, up from $9 billion at the end of 2025. The company also rolled out its latest updates on agentic tools, including Claude Managed Agents , which reduce the time it takes for developers to build their own agents. That revived fears of an AI day of reckoning coming for software. IGV 5D mountain The iShares Expanded Tech-Software Sector ETF (IGV) in the past five trading days “That Anthropic update was staggering,” wrote Ben Reitzes, head of technology research at Melius Research, in a Wednesday note that referred to the revenue run rate. “The exponential we are seeing below stems from the onset of software being tokenized to replace and augment a labor [total addressable market] that approximates to tens of trillions. It’s in inning one – and your narrative must be aligned with this exponential for your stock to work.” “The market is getting it right in SaaS,” Reitzes continued, referring to “software as a service.” “No platform is safe even as we’ve lost $1.4T in SaaS market cap since Anthropic was worth just $18B in January 2025.” Software has come under pressure this year on fears that agentic AI could make traditional software-as-a-service models obsolete, with the IGV more than 35% off its recent high, and 28% lower in 2026. But Anthropic’s projections of its own future performance have researchers concerned the market has yet to price in the full scale of the disruption. Reitzes expects the automation of workflows could hurt even the largest companies, such as members of the Magnificent Seven. Microsoft, for example, will have to show that it can succeed building its own frontier models, given that its 365 product is at risk from inevitable layoffs coming for white collar workers, he said. Amazon’s retail business could be threatened by agentic AI, while Meta’s AI strategy is also in competition with Anthropic, Reitzes added. Investors who expect that software has already bottomed are going through the market to pick those companies that could be best positioned to emerge as AI winners, as many believe the recent bout of selling has been indiscriminate. Yet others remain comfortable sticking to the sidelines for the time being until there is better clarity that software has made a turn. “[I’m] pretty confident that not every software company is going to be a loser, but I’m also confident that there will be many losers,” said John Belton, portfolio manager of GGRW ETF at Gabelli Funds. The portfolio manager said he’s keeping software exposure low until there are signs that sentiment has started to stabilize or bottom. In the meantime, the clear beneficiaries of AI could continue to be in hardware, as in semiconductors, over software, according to Reitzes. The VanEck Semiconductor ETF (SMH) was a major outperformer of this week’s rally, surging more than 9%, as of Thursday. “SaaS is to be avoided,” Reitzes wrote to CNBC. —CNBC’s Gabriel Cortes contributed to this report.
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Thursday, September 24
