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Special Report 3 Stocks to Avoid as Software Sector StumblesAuthored by Dan Schmidt. Date Posted: 1/17/2026. 
Article Highlights - Software stocks have struggled over the last few months, especially those in the Software-as-a-Service (SaaS) industry.
- SaaS firms face substantial disruption from AI agents like Claude Code, which can automate entire workflows and eliminate the need for expensive software licenses.
- Salesforce, DocuSign, and Atlassian could be three industry stocks at risk of losing revenue to new AI tools.
The software sector has already seen more carnage this month compared with the Game of Thrones finale, and we're still only halfway through January. While many stocks in this industry have been suffering extended drawdowns since early 2025, large software companies took another hit this week from "Claude Code," the new agentic coding tool for Anthropic's Claude Sonnet AI bot. Claude Code launched last year, but a recent update sent another round of pain through several legacy software names. Is this selloff overdone, or are software stocks facing a prolonged bear market? Why ‘Claude Code’ Has the Software Sector Spooked Claude Code is rattling the tech sector because of its fully hands-off approach. Unlike earlier AI tools that produced snippets of code for specific tasks (for example, bug fixes), Claude Code offers a largely autonomous command-line system. That lets developers integrate full workflows into the AI for writing, testing and debugging. Instead of acting as a personal assistant or editor, Claude Code's agents can oversee tasks from start to finish, performing high-level design and building entire software stacks with minimal human oversight. While President Trump's official salary is $400,000 per year... his tax returns reveal he's been collecting up to $250,000 PER MONTH from one hidden source. Until recently, most Americans couldn't touch the type of investment that makes up this investment. But thanks to Executive Order 14330, that just changed. If you love investing in disruptive new companies... Discover how to invest in the fund Trump uses to collect this income >> A recent example from a Google engineer helps explain the market reaction. Earlier this month, Gemini API developer Jaana Dogan went viral after claiming Claude Code reproduced a year's worth of her team's work in about an hour. If a year's work can be condensed into a single hour, it creates a nightmare scenario for SaaS firms that derive much of their revenue from annual licenses. Analysts at Oppenheimer highlighted that risk in their downgrade of creative-design giant Adobe Inc. (NASDAQ: ADBE), noting advances like these have the potential to turn software from an AI beneficiary into an AI victim. 3 Software Stocks to Avoid as Sector-Wide Panic Ensues Adobe shares are down more than 25% over the past 12 months, but it isn't the only software name in trouble. The three stocks below all face serious headwinds from the expanding role of AI in workflow productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is one of the original SaaS companies, even scoring the coveted Customer Relationship Management (CRM) ticker when it went public. The company provides a broad suite of cloud-based business platforms and has historically relied on substantial revenue from licensing its platform to large enterprises. If multiple AI agents can now handle the tasks of several hundred human reps, Salesforce stands to lose much of that high-margin license revenue. Compounding the risk is that Salesforce spent more than two decades building a complex cloud ecosystem that many modern businesses now view as cumbersome, inefficient and costly. 
CRM shares staged a brief rally in December, breaking above the 50-day and 200-day simple moving averages (SMAs) before the news of Adobe's downgrade and the latest Claude Code update hit the market. On Jan. 13, CRM slid 7% in a single session, falling below both the 50-day and 200-day SMAs amid heavy selling. A bearish crossover appears to be forming on the moving average convergence divergence (MACD) indicator, suggesting this selling pressure may persist. DocuSign: A Middle Man at Risk of Being Cut Out DocuSign Inc. (NASDAQ: DOCU) was a major beneficiary of the remote-work shift during the COVID-19 pandemic. At the peak of that frenzy, DOCU traded above $300 per share and its valuation drew hype-level comparisons. But like many pandemic-era favorites, the rally faded as the Fed tightened policy, and DocuSign now faces renewed risks of obsolescence. DocuSign's troubles began when e-signature features started to be bundled into larger platforms such as Microsoft 365. Its Intelligent Agreement Management (IAM) business could also be bypassed as AI agents become more customized and enterprise customers opt to negotiate and automate processes inside their own software ecosystems. 
DOCU shares recently hit a new 52-week low and continue to face strong resistance at the 50-day SMA. Investors looking for technical relief aren't finding much: the Relative Strength Index (RSI) sits near the oversold threshold of 30, and selling volume is beginning to ramp up. Atlassian: Potential Obsolescence From Autonomous Workflows Atlassian Corp plc (NASDAQ: TEAM) is the Australian SaaS firm behind widely used workflow tools such as Jira, Confluence, Trello and Bitbucket. If you collaborate on projects, you've likely used one or more of these tools in recent years. Even though Atlassian has been aggressively integrating AI into its product suite, agents like Claude Code could centralize and automate workflows in ways that make some standalone platforms redundant. Atlassian licenses several separate products, and the obsolescence of any major one could materially hurt the company's results. 
TEAM shares were rejected at the 50-day SMA and have now fallen in seven of the last 10 trading sessions, losing more than 15% in the process. A bearish MACD crossover confirms the latest leg of the downtrend, and the stock risks erasing more than two years' worth of gains if the trend continues.
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