How exposed are software stocks to AI tools? We put vibe-coding to the test

Core Insights - Recent sell-offs in software, legal services, and video game stocks are driven by fears that new AI features could disrupt these industries [1] - The development of AI tools like Anthropic's "Claude Code" demonstrates the potential for non-developers to create functional applications, raising concerns for established project management platforms [2][3] Industry Impact - Companies like Monday.com, with a market cap of $5 billion, are at risk as AI tools can replicate their functionalities quickly and cost-effectively [2][5] - The ability of AI to enhance project management capabilities, such as integrating personal reminders and calendar events, showcases the potential for AI to replace traditional software solutions [4] Company Vulnerability - Companies that provide tools that are not core to business operations, such as Atlassian, Adobe, HubSpot, Zendesk, and Smartsheet, are considered most exposed to disruption from AI advancements [5] - Cybersecurity firms like CrowdStrike and Palo Alto are viewed as more resilient due to their network effects, making them harder to replicate [6] - Systems of record, such as Salesforce, may be safer but are not immune to disruption, as they anchor businesses with essential enterprise data [6] Investment Opportunities - The current sell-off in software stocks presents an opportunity for investors to differentiate between essential services and those that are merely supplementary [6]