Software experiencing ‘most exciting moment’ as AI fears hammer the stocks

Box CEO Aaron Levie says that in the 20-year history of his cloud software vendor, “this is the most exciting moment we’ve ever had.” Wall Street doesn’t see it that way.

The stock is down 17% in 2026 after starting the year with its steepest monthly drop since 2023. It’s gotten caught up in a software swoon, as investors dump shares of companies that they worry will get displaced by the rise of artificial intelligence agents.

The WisdomTree Cloud Computing Fund has plummeted about 20% so far in 2026, including a 6.5% drop this week. A number of companies are faring far worse than Box. HubSpot has fallen 39% this year following a 42% slump in 2025. Figma has plunged 40% this year, Atlassian is down 35%, and Shopify has dropped 29%.

The generative AI boom, kickstarted by OpenAI’s ChatGPT a little over three years ago, has rapidly pushed into the business realm, with new tools that can create apps, websites and other digital products in a matter of seconds or minutes with a few text prompts. Levie describes the “cognitive dissonance” happening inside the industry, as companies see the power of the new technology to enhance their products, while also reckoning with the broader outside fear that AI will destroy them.

“It somewhat misunderstands this idea of where companies tend to spend their resources and their time and their energy,” Levie told CNBC’s “The Exchange” on Wednesday.

He made the case that businesses would much rather pay for products and services from a vendor specializing in back office software or customer relationship management systems than do it themselves and carry all the liabilities that follow.

Salesforce CEO Marc Benioff has made a similar argument, telling CNBC’s Jim Cramer in December that “We’ve got all the customers’ data” and that Agentforce, which automates sales and customer service workflows, is “the fastest growing product I have ever seen in the history of Salesforce.”

Bill McDermott, CEO of ServiceNow, said last week, after his company reported healthy quarterly results and guidance, that the market’s concerns are misplaced and that his products serve “as the semantic layer that makes AI ubiquitous in the enterprise.”

Dan Springer, former CEO of DocuSign who now runs legal software startup Ironclad, said ServiceNow’s offerings can’t be replaced by AI, at least not yet.

“I haven’t seen something that’s been built that would attack that franchise,” Springer said.

Still, Salesforce and ServiceNow have both lost about a quarter of their value this year.

A big catalyst for the accelerating selloff has been advancements at Anthropic, creator of the Claude AI model. On Friday, Anthropic announced new legal, finance and product marketing capabilities for its Claude Cowork productivity tool, and released the plugins under an open-source license, enabling customization.

Claude is going head-to-head with OpenAI’s GPT models and Google’s Gemini, but with a focus on selling subscriptions to large businesses that are looking to deploy AI widely.

“I am in awe of this technology,” said Celso Pinto, senior director of product at software company The Access Group, in a Monday X post. He said he’s used Cowork and the Claude Code software development product to review marketing copy, fix technical issues and produce legal documents.

The public and private markets have decided that infrastructure companies and the top model developers are the AI winners, while software companies are the likely losers, regardless of how strong their businesses may look today.

Earlier this month, Anthropic signed a term sheet for a $10 billion funding round at a $350 billion valuation. OpenAI is reportedly eyeing a valuation at over $800 billion, and Google parent Alphabet has seen its stock soar over 60% in the past year, lifting its market cap to $4 trillion.

Software executives aren’t the only ones trying to counter the prevailing narrative. A number of tech investors and analysts have said that, on the ground, they’re not seeing IT buyers strip out their software solutions. Analysts at Stifel wrote in a report last month about HubSpot that the CRM company’s business looks fine.

“Despite broader fears of AI-related disruption, no partner cited near-term headcount reductions or seat disruption related to AI,” wrote the analysts, who recommend buying the stock.

Cantor analysts covering Monday.com wrote in a note this week that the provider of project management software is a “profitable grower benefiting from digital and AI collaboration secular growth trends.” They have a buy rating on the stock and see the 29% drop this year as creating an “attractive setup.”

Byron Deeter, a longtime cloud software investor at Bessemer Venture Partners, is taking a buy-the-dip approach.

“Chaos creates opportunity!” Deeter wrote in a post on X on Wednesday. “A lot of money is about to be made for those who have the conviction to place the right private and public software bets right now.”

At Box, where Deeter was an early investor, the company’s 41-year-old co-founder and CEO says that even if investor fears are overblown, software providers have to rapidly embrace AI to stay relevant.

“AI is causing every software company to have to stay on its toes,” Levie said. “It is certainly forcing every incumbent to make sure that they’re doing more for their customers. I think that’s an incredible thing for the market and for IT buyers.”

— CNBC’s Ari Levy contributed to this report.

WATCH: Software sector loses about 30% of value in three months. Here’s what’s behind the sell-off