Software stocks kept sliding Friday, with the iShares Expanded Tech Software ETF $IGV ( ▼ 1.47% ) lagging the broader market again as investors reprice what “value” means in a world where AI agents can do the work inside a single interface.
Why Claude Code is a big deal for markets
The surge in attention around Anthropic’s Claude Code, and now Claude Cowork, is being treated like a “ChatGPT moment” for AI agents. The point is not that it is a better chatbot. It is that agents can now plan, execute, and ship real work across files and workflows, without needing the traditional SaaS layer to sit in the middle.
That is the fear trade: if an agent can do the task, the software that used to do the task becomes optional.
The divergence is rare and it’s sending a signal
There is also something unusual happening in the tape. Historically, when software gets hit hard over a month, the S&P 500 usually gets hit too. But this week, you are seeing the opposite: the market holding up while software keeps getting slammed. That kind of sector specific pain is rare, and it usually means investors think the issue is structural, not cyclical.
What the bear case actually is
Doug O’Laughlin at SemiAnalysis frames it as a shift in how “software” works. If AI agents keep improving, the value moves away from polished user interfaces, workflow glue, and convenience features, because those can be generated on demand.
In that world, the durable value is the underlying system of record and what can be accessed programmatically. Think data, permissions, distribution, and APIs, not prettier dashboards.
What software companies have to do next
If this is the direction markets are betting on, the playbook changes. Software firms need to defend what is persistent and hard to replicate, like proprietary data, embedded distribution, compliance and trust rails, switching costs, and integrations that function like infrastructure.
The parts that used to win deals, like smoother UI and faster workflows, start to look like features an agent can recreate cheaply.
Bottom line
Investors are not just selling software because growth slowed. They are selling because Claude Code and agent style tools are making the market ask a harsher question: if the interface becomes ephemeral, what is the moat actually made of.