AI Threat or Hype? Software Industry Faces Turmoil Amidst AI Advancements

• Anthropic's new AI tools, including Claude Cowork, sparked a sell-off in tech stocks, raising fears AI will replace traditional software tasks.
• Investors worry AI agents performing legal research, CRM, and analytics could eliminate the need for separate software purchases.
• The S&P 500 Software & Services Index dropped over 4% and is down 20% year-to-date, impacting companies like Salesforce and Infosys.
• Nvidia CEO Jensen Huang and Arm Holdings CEO Rene Haas dismiss fears, stating AI will enhance software, not destroy it, calling market reaction 'micro-hysteria'.
• Analysts suggest AI is a headwind, but the current sell-off overestimates the catastrophic impact, as companies won't abandon legacy systems overnight.