Software Stocks Have Entered a Bear Market. Is This the End of the AI Trade, or Just the Beginning?

When Anthropic released Claude Code in early 2026, something unusual happened. The market didn't reward artificial intelligence (AI) innovation -- it punished software stocks for it.​ At the time, the iShares Expanded Tech-Software Sector ETF dropped more than 14%, the exchange-traded fund's worst stretch since 2008.Why were software stocks hit? Because Claude Code was touted as a potential AI-powered replacement for some of the hottest software-as-a-service (SaaS) offerings out there.Individual software co ...