Why Jensen Huang Isn't Writing Off the Software Industry

"It's easy to give up on software stocks (especially SaaS companies) or write off the future of the industry entirely. And while the powerful new AI and agentic tools are profound innovations that could rewrite the future of apps, perhaps it's a bit too soon to jump off the sinking ship that is software. Could it be that Anthropic's new Claude Code, Cowork, and comparable AI innovations from rivals will put the nail in the coffin for the unloved SaaS companies?"

"Nvidia (NASDAQ:NVDA | NVDA Price Prediction) top boss, Jensen Huang, has a knack for knowing how new technologies will shape the future. And while he's one of the biggest bulls on AI, even he thinks it's a bit of a stretch to think that the software industry is headed straight to zero. Huang went as far as to say it's "illogical" to think that AI would replace software."

"And while Jensen has been spot-on nearly every step of the way, his words have not been all too soothing for the fallen software stocks, some of which have been in free-fall for over a year now. What will it take to reverse the tides? I'm not so sure, but I'd much rather pay a premium for AI than go hunting for value in some of the SaaS plays."

Powerful new AI and agentic tools represent profound innovations with the potential to rewrite app functionality, yet complete replacement of software appears premature. Some AI offerings, like Anthropic's Claude Code and Cowork, raise fears about SaaS viability, but replacement of software is unlikely. Nvidia CEO Jensen Huang believes it is illogical to assume AI will replace software entirely. Many software stocks have plunged and could face further volatility as business models shift from seat-based pricing to usage-based models. Investor patience may erode if new AI tools trigger panic selling. Companies that adapt to usage models and leverage AI may survive and benefit. The current "SaaSpocalypse" underscores industry upheaval but also suggests that AI valuations may not form a simple bubble.

Read at 24/7 Wall St.