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Just For You 3 Stocks to Avoid as Software Sector StumblesAuthored by Dan Schmidt. Publication Date: 1/17/2026. 
At a Glance - 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 than the finale of Game of Thrones, and we're still only halfway through January. While many stocks in this industry have been suffering extended drawdowns since early 2025, big software companies received even more bad news this week from "Claude Code," the new agentic coding tool for Anthropic's Claude Sonnet AI bot. Claude Code was actually launched last year, but a new update this month sent another round of pain to some legacy software stocks. Is this selloff overdone, or are software stocks staring down a prolonged bear market? Why "Claude Code" Has the Software Sector Spooked Claude Code is sending shockwaves through the tech sector thanks to its complete, hands-off design. Unlike earlier AI agents that wrote snippets of code for specific tasks (i.e., bug fixing), Claude Code offers a fully autonomous command-line system. This disruptive approach allows developers to integrate their workflows into the AI tool for writing, testing, and debugging. Instead of acting as a personal assistant or editor, Claude Code's agents oversee the entire task from start to finish, executing the high-level design and implementation of full software stacks with minimal human oversight. A recent example from a Google engineer highlights why Claude Code has sent a shiver up the spines of Software as a Service (SaaS) companies. Earlier this month, Gemini API developer Jaana Dogan went viral for claiming that Claude Code recreated a year's worth of her team's work in just one hour. If a year's worth of work can be reduced to a single hour, it's a nightmare scenario for SaaS firms that earn a bulk of their revenue from yearly licenses. Analysts at Oppenheimer noted this in their downgrade of creative-design giant Adobe Inc. (NASDAQ: ADBE) earlier this week, saying the software industry has shifted 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% over the past 12 months, but it isn't the only software stock in trouble. The following three names 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 the original SaaS company, having gone public early enough to earn the coveted Customer Relationship Management (CRM) ticker. Salesforce offers a complete suite of cloud-based business platforms and historically relied on substantial revenue from licensing its platform to large enterprises. If a small number of AI agents can perform the work of hundreds of human reps, Salesforce could see much of that high-margin license revenue disappear. The company spent more than 20 years building that complex cloud ecosystem, which 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 markets. On Jan. 13, CRM dropped 7% in a single session, falling below the 50-day and 200-day SMAs once again amid a wave of selling. A bearish crossover appears to be forming on the moving average convergence divergence (MACD) indicator, suggesting this selling pressure may not ease soon. DocuSign: A Middle Man at Risk of Being Cut Out DocuSign Inc. (NASDAQ: DOCU) was a major beneficiary of the work-from-home revolution that began with COVID-19. At the height of the pandemic, DOCU shares reached meme-stock velocity, trading over $300 per share and sending the company's valuation soaring. But like many COVID-era winners, DocuSign's rally faded as the Fed began raising rates, and the company now faces risks to its core business model. DocuSign's struggles began years ago when e-signature solutions started getting bundled into broader platforms like Microsoft 365. Additionally, the company's Intelligent Agreement Management (IAM) could be bypassed entirely as AI agents become more customized and clients opt to negotiate and automate workflows inside their own enterprise software. 
DOCU shares recently notched a new 52-week low and continue to face strong resistance at the 50-day SMA. The Relative Strength Index (RSI) is below the oversold threshold of 30, and selling volume is beginning to ramp up — not a reassuring setup for investors seeking a near-term turnaround. Atlassian: Potential Obsolescence From Autonomous Workflows Atlassian Corp plc (NASDAQ: TEAM) is the Australian SaaS firm 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. While Atlassian has been aggressively integrating AI into its suite, it also risks some platforms becoming redundant as agents like Claude Code make centralized workflow integration easier. Atlassian licenses several standalone platforms, and the irrelevance of any 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 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 could erase more than two years' worth of gains.
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