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Today's Exclusive Article 3 Stocks to Avoid as Software Sector StumblesBy Dan Schmidt. Article Published: 1/17/2026. 
Key Points - 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 suffered 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 in extended drawdowns since early 2025, large software companies took fresh hits this week after a new update to "Claude Code," the agentic coding tool built for Anthropic's Claude Sonnet AI bot. Claude Code actually launched last year, but this month's update renewed 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 design. Unlike earlier AI assistants that produced snippets of code for specific tasks (such as bug fixes), Claude Code provides a command-line system that can operate end-to-end. Developers can integrate their workflows into the tool to write, test, and debug code. Rather than acting as a personal assistant or editor, Claude Code's agents can manage entire tasks from start to finish, executing the high-level design and implementation of software stacks with minimal human oversight. Markets rarely collapse without warning, but the warnings are often ignored. Right now, margin debt has reached $1.21 trillion, near record territory. The last two times leverage hit these peaks was just before the dot-com bust and the global financial crisis. When leveraged investors get hit, they don't choose to sell. They're forced to sell. That's what a margin call is: mass liquidation. One analyst who called the Fannie Mae implosion and the COVID inflation shock sees striking similarities to the 1999 melt-up. Watch his emergency broadcast to see how to prepare and three investments to consider now. A recent example from a Google engineer underlines why Software as a Service (SaaS) companies are 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 about an hour. If a year's work can be compressed into a single hour, it poses a nightmare scenario for SaaS firms that rely on annual license fees for much of their revenue. Analysts at Oppenheimer cited that risk in their downgrade of creative design giant Adobe Inc. (NASDAQ: ADBE), saying advances in tools like Claude Code could transform software firms from AI beneficiaries into AI victims. 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 under pressure. The three names below face meaningful headwinds from AI-driven changes in workflow productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is one of the original SaaS companies and, fittingly, trades under the CRM ticker. Salesforce offers a broad suite of cloud-based business platforms and has historically relied heavily on license revenue from large enterprises. But if a small number of AI agents can replicate the work of hundreds of human reps, Salesforce could lose a sizable portion of that high-margin license revenue. Compounding the problem, the company has spent more than two decades building a complex cloud ecosystem that some modern businesses now regard as cumbersome, inefficient, and expensive. 
CRM shares staged a brief rally in December, briefly breaking above the 50-day and 200-day simple moving averages (SMAs) before Adobe's downgrade and the latest Claude Code update hit the market. On Jan. 13, CRM fell 7% in a single session, dropping 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 not ease soon. DocuSign: A Middle Man at Risk of Being Cut Out DocuSign Inc. (NASDAQ: DOCU) benefited enormously from the work-from-home shift during the COVID-19 pandemic. At the peak, DOCU shares reached meme-stock velocity, trading well above $300 per share and pushing the company's valuation to lofty levels. But the rally faded as the Federal Reserve tightened policy, and DocuSign now faces the risk of obsolescence. DocuSign's challenges began when e-signature features were bundled into larger platforms such as Microsoft 365. On top of that, the company's Intelligent Agreement Management (IAM) could be bypassed as AI agents become more tailored and clients prefer to negotiate and manage agreements directly within their enterprise software. 
DOCU shares recently hit a new 52-week low and continue to face stiff resistance at the 50-day SMA. Investors looking for a bullish sign won't find much: the Relative Strength Index (RSI) remains below the oversold threshold of 30, and selling volume is starting to pick up. Atlassian: Potential Obsolescence From Autonomous Workflows Atlassian Corp plc (NASDAQ: TEAM) is the Australian software firm behind widely used workflow tools such as Jira, Confluence, Trello and Bitbucket. If you collaborate on projects, you've likely used at least one of these platforms. Although Atlassian has been integrating AI across its product suite, it risks some of those platforms becoming redundant as agents like Claude Code make centralized workflow integration easier. Atlassian licenses several standalone products, and the loss of relevance for any one of them could significantly hurt revenue. 
TEAM shares were rejected at the 50-day SMA and have been down seven of the last 10 trading days, losing more than 15% over that stretch. A bearish MACD crossover confirms the latest leg of the downtrend, which could erase more than two years' worth of gains if it continues.
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