What Happened?
A number of stocks fell in the afternoon session after investor fears over artificial intelligence disrupting the software industry sparked a broad sell-off.
The anxiety stemmed from the rapid adoption of new 'agentic AI' tools, which some investors believed could dismantle traditional Software-as-a-Service (SaaS) business models. This 'AI Panic' led to indiscriminate selling across the sector. The market move reflected growing concerns about the downside of the AI boom for established software companies.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Design Software company Autodesk (NASDAQ: ADSK) fell 2.7%. Is now the time to buy Autodesk? Access our full analysis report here, it’s free.
- Cloud Monitoring company Datadog (NASDAQ: DDOG) fell 2.6%. Is now the time to buy Datadog? Access our full analysis report here, it’s free.
- Project Management Software company Atlassian (NASDAQ: TEAM) fell 3%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
- Data Infrastructure company C3.ai (NYSE: AI) fell 3.3%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
- Tax Software company BlackLine (NASDAQ: BL) fell 2.7%. Is now the time to buy BlackLine? Access our full analysis report here, it’s free.
Zooming In On C3.ai (AI)
C3.ai’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock dropped 8.3% on the news that the "AI replacement" narrative reached a fever pitch following the release of new models from Anthropic and OpenAI. The simultaneous debut of Anthropic's Claude Opus 4.6 and OpenAI's "Frontier" agent platform raised concerns that autonomous agents are no longer just tools, but new operating systems that can cannibalize traditional software. This suggests that specialized applications might be reduced to mere features within frontier models, rendering legacy seat-based licensing models increasingly obsolete. The catalyst is the models' unprecedented agentic power. Opus 4.6’s "software hunting" capability allows it to autonomously audit and patch complex codebases, while OpenAI's Frontier platform bypasses traditional CRM and ticketing interfaces to perform enterprise work directly. By commoditizing sophisticated workflows into low-cost API calls, these releases threaten the recurring revenue of software giants. As AI builds bespoke tools on demand, the market is aggressively repricing the entire software application layer.
C3.ai is down 24.3% since the beginning of the year, and at $10.40 per share, it is trading 67.3% below its 52-week high of $31.78 from February 2025. Investors who bought $1,000 worth of C3.ai’s shares 5 years ago would now be looking at an investment worth $74.28.
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