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More Reading from MarketBeat.com 3 Stocks to Avoid as Software Sector StumblesAuthored by Dan Schmidt. Date 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 enduring extended drawdowns since early 2025, large software companies took another hit this week from ‘Claude Code,’ an agentic coding tool in Anthropic’s Claude Sonnet AI. Claude Code launched last year, but a recent update has renewed selling pressure on 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 autonomous, hands-off design. Unlike early AI agents that generated short snippets of code for specific tasks (for example, bug fixes), Claude Code presents a command-line system that can run end-to-end. This approach lets developers integrate entire workflows into the AI for writing, testing, and debugging. Rather than serving as an assistant or editor, Claude Code’s agents can manage complete tasks from start to finish, executing high-level design for software stacks with minimal human oversight. 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 underscores why SaaS companies are worried. Earlier this month, Gemini API developer Jaana Dogan went viral after saying Claude Code recreated a year’s worth of her team’s work in roughly an hour. If a year’s work can be compressed into a single hour, that represents a worst-case scenario for SaaS firms that derive a large share of revenue from annual licenses. Analysts at Oppenheimer referenced this risk in their downgrade of creative-design giant Adobe Inc. (NASDAQ: ADBE) earlier this week, saying software can flip from being an AI beneficiary to an AI victim as these tools improve. 3 Software Stocks to Avoid as Sector-Wide Panic Ensues Adobe shares are down more than 25% over 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 workflow productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is one of the original SaaS companies and long ago secured the coveted CRM ticker. Salesforce offers a broad suite of cloud-based business platforms and has historically relied on substantial revenue from licensing its platform to large enterprises. However, if a handful of AI agents can replace the work of hundreds of human reps, Salesforce could see a meaningful decline in high-margin license revenue. Compounding the issue, the company has spent more than 20 years 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), but the rally faded after Adobe’s downgrade and the latest Claude Code update hit the market. On Jan. 13, CRM fell about 7% in a single session, dropping back 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 not ease soon. DocuSign: A Middleman at Risk of Being Cut Out DocuSign Inc. (NASDAQ: DOCU) benefited greatly from the work-from-home shift that began when COVID-19 arrived in the U.S. At the height of the pandemic, DOCU shares traded above $300 and the company reached meme-stock levels of enthusiasm. Like many COVID-era darlings, the rally cooled as the Fed tightened, and DocuSign now faces the risk of obsolescence. DocuSign’s challenges began when e-signature tools were increasingly bundled into larger platforms such as Microsoft 365. On top of that, the company’s Intelligent Agreement Management (IAM) offerings could be bypassed as AI agents become highly customizable and enterprises handle negotiations inside their own software environments. 
DOCU shares recently hit a new 52-week low and continue to face strong resistance at the 50-day SMA. Investors seeking a silver lining are getting little from 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 firm behind widely used workflow tools such as Jira, Confluence, Trello and Bitbucket. If you collaborate on projects, you’ve likely encountered one or more of its products. Although Atlassian has been integrating AI across its suite, it still faces the risk that agentic tools like Claude Code could centralize workflows and reduce demand for standalone platforms. 
TEAM shares were rejected at the 50-day SMA and have fallen seven of the last 10 trading days, losing more than 15% in the process. A bearish MACD crossover confirms the current downtrend, and the stock risks erasing more than two years’ worth of gains if the decline continues.
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