Investor anxiety was driven by Anthropic’s release of a legal AI automation tool capable of performing tasks traditionally handled by expensive subscription-based software—such as contract analysis and legal brief preparation. While the tool is not the only legal automation solution on the market, it poses a unique threat because Anthropic is itself a foundational AI model developer, unlike startups such as Legora or Harvey AI, which depend on third-party model providers. This vertical integration gives Anthropic a significant competitive advantage.

Concerns had already been building in January following the release of Claude Cowork, another Anthropic product that raised alarms about the vulnerability of the software sector to rapid AI-driven disruption. Last week, pressure intensified further after Alphabet began rolling out Project Genie, a system capable of generating 3D worlds from text or visual prompts—triggering sell-offs in gaming stocks.

As a result, the S&P North American Software Index has entered a decline at a pace not seen since the 2008 global financial crisis.

“We call it the SaaSpocalypse—an apocalypse for software-as-a-service stocks,” a trader at Jefferies told Bloomberg.

Anthropic CEO Dario Amodei previously warned that artificial intelligence could take over the majority of code-writing tasks as early as 2026, a forecast that now appears increasingly relevant to investors reassessing long-term valuations in the software industry.