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Just For You 3 Stocks to Avoid as Software Sector StumblesWritten by Dan Schmidt. Article Posted: 1/17/2026. 
Summary - 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 only halfway through January. While many stocks in this industry have been suffering extended drawdowns since early 2025, large software companies received more bad news this week from 'Claude Code,' the agentic coding tool built for Anthropic's Claude Sonnet AI bot. Claude Code launched last year, but a new update this month renewed pain for 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 design. Unlike early AI agents that wrote snippets of code for specific tasks (for example, bug fixes), Claude Code offers a fully autonomous command-line system. Developers can integrate their workflows into the AI tool to write, test, and debug with minimal human intervention. Rather than acting as a personal assistant or editor, Claude Code's agents can oversee entire tasks from start to finish, executing high-level design across whole software stacks. 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 A recent example from a Google engineer illustrates why Claude Code is worrying SaaS companies. Earlier this month, Gemini API developer Jaana Dogan went viral after claiming Claude Code replicated a year's worth of her team's work in about an hour. If a year's work can be reduced to a single hour, it creates a nightmare scenario for SaaS firms that earn the bulk of their revenue from annual licensing. Analysts at Oppenheimer highlighted this in their downgrade of creative design giant Adobe Inc. (NASDAQ: ADBE) this week, arguing that advances in these tools have flipped 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% in the last 12 months, but it isn't the only software stock under pressure. The three companies below face significant headwinds as AI increasingly automates workflow productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is the original SaaS giant, having gone public early enough to secure the coveted Customer Relationship Management (CRM) ticker. Salesforce provides a full suite of cloud-based business platforms and has historically relied on substantial revenue from licensing its platform to large enterprises. But if a relatively small number of AI agents can perform the work of hundreds of human sales reps, Salesforce risks losing a meaningful portion of that high-margin license revenue. Compounding the problem, the company has spent more than two decades 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 Adobe's downgrade news and the latest Claude Code update hit the market. On Jan. 13, CRM slid 7% in a single session, falling below 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 the selling pressure may persist. DocuSign: A Middle Man at Risk of Being Cut Out DocuSign Inc. (NASDAQ: DOCU) benefited greatly from the work-from-home boom that began with the COVID-19 pandemic. At its peak, DOCU shares traded above $300 per share and the company reached a sky-high valuation. But like many COVID-era momentum stocks, the rally faded once the Federal Reserve raised interest rates, and DocuSign now faces the risk of becoming redundant. DocuSign's troubles began when e-signature tools were bundled into larger platforms such as Microsoft 365. Its Intelligent Agreement Management (IAM) offering could also be circumvented entirely as AI agents become more customizable and clients move to negotiate and manage contracts within their own enterprise systems. 
DOCU shares recently hit a new 52-week low and face strong resistance at the 50-day SMA. The Relative Strength Index (RSI) remains in oversold territory (below 30), and selling volume is beginning to ramp up—hardly a comforting setup for investors. 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 work with collaborators, you've likely used one or more of these products recently. Even though Atlassian has been integrating AI into its offerings, it risks parts of its product suite becoming redundant as agents like Claude Code make centralized workflow automation easier. 
TEAM shares were rejected at the 50-day SMA and have fallen seven of the past 10 sessions, losing more than 15% in the process. A bearish MACD crossover confirms the latest leg down, and if this trend continues the stock risks giving back more than two years' worth of gains.
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