How Claude Code “is the ChatGPT moment repeated” — and why that’s awful news for software stocks

The relentless slide in software stocks last week continued through Friday, with the iShares Expanded Tech Software ETF (or IGV) trading to the downside and down nearly 6% over the course of the week.

The growing adoption of Claude Code, and more recently, the launch of Claude Cowork by Anthropic, has been an attention-grabbing moment as to the power of AI agents and how they can be housed and operated solely under one highly integrated user interface.

To say that software stocks have fallen out of favor would be an understatement, as having this much industry-specific market pain is incredibly rare.

Based on data going back to 2001, if IGV has fallen at least 5% over the past month, the SPDR S&P 500 ETF is typically also down between 5% to 6% over the same period.

Less than 3% of the time does SPY rise at least 1% while software stocks have gotten slammed — 28 instances in total, going back to August 2001 — and three of those are the past three sessions.

A smattering of once high-flying, expensive software stocks, including Salesforce, Adobe, and Atlassian, have all seen their enterprise value compress to below 5x their estimated sales (from as high as 40x in 2021).

AI agents are able to develop software and handle the tasks and processes that served as the core value proposition of these companies.

Doug O’Laughlin, president of SemiAnalysis, authored a thought-provoking piece in which he argued that “Claude Code is the ChatGPT moment repeated.”

The Takeaway

It’s a fire alarm moment for software, which risks being perceived as the horse-drawn carriage manufacturer the moment that engineers first seized the power of steam.

“What I’m trying to say is that the traditional differentiation metrics will change,” O’Laughlin wrote. “Faster workflows, better UIs, and smoother integrations will all become worthless, while persistent information, a la an API, will become extremely valuable.”

As the marginal corporate dollar goes directly to AI rather than software or labor, it makes sense that investors’ dollars appear to be doing the same thing.