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Additional Reading from MarketBeat Media 3 Stocks to Avoid as Software Sector StumblesReported by Dan Schmidt. 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 worthy of the finale of Game of Thrones, and we’re still only halfway through January. While many stocks in the industry have been suffering extended drawdowns since early 2025, large software companies took another hit this week after an update to ‘Claude Code’, the agentic coding tool for Anthropic’s Claude Sonnet AI. Claude Code launched last year, but this month’s update sent another round of pain to some legacy software stocks. Is this selloff overdone, or are software names facing a prolonged bear market? Why ‘Claude Code’ Has the Software Sector Spooked Claude Code is sending shockwaves through the tech sector because of its fully hands-off design. Unlike early AI agents that generated snippets of code for specific tasks (for example, bug fixes), Claude Code provides a fully autonomous command-line system. This disruptive approach lets developers integrate entire workflows into the AI tool for writing, testing, and debugging. A widely followed Wall Street analyst is highlighting AES Corp (AES) as a stock to watch right now, based on signals from his proprietary Power Gauge system. The model tracks factors like momentum, financial strength, and institutional activity across thousands of U.S. stocks.
He breaks down the full reasoning in a short briefing, including why AES is showing unusual strength at this stage of the market. See the full analysis here Rather than acting as a personal assistant or editor, Claude Code’s agents can oversee a task from start to finish, handling high-level design and implementation for entire software stacks with minimal human oversight. A recent example from a Google engineer illustrates why Claude Code has SaaS companies nervous. Earlier this month, Gemini API developer Jaana Dogan went viral after claiming Claude Code recreated a year’s worth of her team’s work in roughly one hour. If a year of effort can be condensed into an hour, it’s a nightmare scenario for SaaS firms that earn the bulk of their revenue from annual licenses. Analysts at Oppenheimer highlighted this risk in their downgrade of creative-design giant Adobe Inc. (NASDAQ: ADBE) earlier this week, saying software is beginning to shift from an AI beneficiary to an AI victim as these tools advance. 3 Software Stocks to Avoid as Sector-Wide Panic Ensues Adobe shares are down more than 25% in the last 12 months, but it isn’t the only software stock under pressure. The three names below face meaningful headwinds from the expanding role of AI in workplace productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is the original enterprise SaaS company and the owner of the coveted CRM ticker. The company offers a broad suite of cloud-based business platforms and has historically relied on substantial revenue from licensing its platform to large enterprises. If a relatively small number of AI agents can replicate the work of hundreds of human reps, Salesforce could see a significant portion of that high-margin license revenue disappear. Compounding the risk, the company has spent more than 20 years building a complex cloud ecosystem that many modern businesses now view as cumbersome, inefficient, and expensive. 
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 dropped 7% in a single session, slipping 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 work-from-home shift that began when COVID-19 arrived in the U.S. During the pandemic peak, DOCU shares traded above $300 and the company’s valuation surged dramatically. But like many COVID-era momentum names, DocuSign has since cooled and now faces obsolescence risks. DocuSign’s challenges began when e-signature functionality started being bundled into broader platforms such as Microsoft 365. On top of that, the company’s Intelligent Agreement Management (IAM) offering could be bypassed as AI agents become more tailored and customers negotiate agreements directly within their enterprise software. 
DOCU shares recently hit a new 52-week low and continue to face strong resistance at the 50-day SMA. Investors aren’t finding much reason for optimism on the chart: the Relative Strength Index (RSI) remains in oversold territory (below 30), and selling volume is beginning to pick up. Atlassian: Potential Obsolescence From Autonomous Workflows Atlassian Corp plc (NASDAQ: TEAM) is the Australian SaaS company behind popular workflow tools like Jira, Confluence, Trello, Bitbucket, Loom and Slack. If you collaborate on projects, you’ve likely used one or more of these tools recently. Although Atlassian has been integrating AI into its suite, it still risks some platforms becoming redundant as agents like Claude Code make it easier to centrally orchestrate workflows. Atlassian licenses several standalone products, and the irrelevance of even one could materially hurt the company’s results. 
TEAM shares were rejected at the 50-day SMA and have now been down seven of the last 10 trading days, losing more than 15% in the process. A bearish MACD crossover confirms the latest leg of the downtrend, and if this momentum continues the stock risks erasing more than two years’ worth of gains.
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