Software as a service, or “SaaS,” is a bread-and-butter business model that is now at risk of disruption because of AI, investors say, a microcosm of how AI could upend the way many businesses operate.
Shares in software giant Salesforce (CRM) are down 26% this year, making it the second-worst performing stock in the Dow.
Meanwhile, Adobe (ADBE) shares are down 19% this year. Shares in Atlassian (TEAM), which owns applications like Trello, are down 30% over the same time.
In comparison, the benchmark S&P 500 is up 10% this year, while the tech-heavy Nasdaq Composite is up 11%.
“Software valuations remain under pressure from the ‘death of software due to AI’ narrative, which likely drives continued volatility in the short term,” Matthew Hedberg, a software research analyst at RBC Capital Markets, said in an August 12 note.
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