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Exclusive Story 3 Stocks to Avoid as Software Sector StumblesSubmitted by Dan Schmidt. Article Published: 1/17/2026. 
In Brief - 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. Many stocks have experienced extended drawdowns since early 2025, and this week large software companies got more bad news: "Claude Code," an agentic coding tool for Anthropic's Claude Sonnet AI bot. Claude Code launched last year, but a recent update has inflicted another round of pain on some 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 tools that produced short snippets of code for specific tasks (for example, bug fixes), Claude Code offers a command-line system that can be integrated into developers' workflows for writing, testing and debugging. Rather than acting as a personal assistant or editor, Claude Code's agents can oversee end-to-end tasks, executing high-level designs of entire software stacks with minimal human oversight. A recent example from a Google engineer highlights why this is worrying for Software as a Service (SaaS) companies. 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 worth of work can be reduced to a single hour, that's a nightmare for SaaS firms that rely heavily on annual license revenue. Analysts at Oppenheimer noted this in their downgrade of creative-design giant Adobe Inc. (NASDAQ: ADBE), arguing that software has flipped from 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 past 12 months, but it's not the only software stock in trouble. The three names below face meaningful headwinds from AI's expanding role in workflow automation and productivity. Salesforce: Agentic AI Risks Cannibalizing Key Business Salesforce Inc. (NYSE: CRM) is one of the original SaaS companies, known for the Customer Relationship Management (CRM) ticker. It offers a broad suite of cloud-based business platforms and has long relied on recurring revenue from enterprise licenses. If a handful of AI agents can perform the work of hundreds of human reps, Salesforce risks losing a significant portion of that high-margin license revenue. The company has spent decades building a complex cloud ecosystem that some modern businesses now see as cumbersome and costly. 
CRM shares staged a brief rally in December, 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 dropped 7% in a single session, slipping below the 50-day and 200-day SMAs again 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 with COVID-19. During the pandemic, DOCU shares reached meme-stock velocity, trading above $300 per share and inflating the company's valuation. But like many COVID-era meme stocks, the run-up ended as the Fed tightened policy, and DocuSign now faces risks to its core business. DocuSign's struggles began years ago when e-signature capabilities were bundled into larger platforms such as Microsoft 365. Now, Intelligent Agreement Management (IAM) faces a new threat: AI agents that can be customized to negotiate and manage agreements inside enterprise software, potentially bypassing DocuSign entirely. 
DOCU shares recently hit a new 52-week low and continue to face resistance at the 50-day SMA. The chart offers little optimism: the Relative Strength Index (RSI) sits near the oversold threshold of 30, and selling volume has been increasing. 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 used one or more of these products recently. While Atlassian has been integrating AI into its offerings, it risks some platforms becoming redundant as agents like Claude Code make it easier to centrally coordinate workflows. Atlassian licenses several standalone products, and the loss of relevance for any of them could materially hurt the company's bottom line. 
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 latest leg of the downtrend, and the stock risks erasing more than two years' worth of gains if this trend continues.
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