we're all sc--wed. Software developers and sales.
The recent "AI jitters" (early February 2026) refer to a sharp, widespread sell-off in technology and software stocks driven by investor panic that AI is evolving from a growth opportunity into a disruptive force that could destroy existing business models. Investors are increasingly skeptical about the immediate return on investment for massive AI expenditures, leading to fears that "AI is eating software".
Key drivers of the current AI jitters include:
Disruption of Software-as-a-Service (SaaS): New, highly capable AI tools (such as those launched by Anthropic) are threatening to make expensive, legacy software subscriptions redundant. Companies that charge high fees for services like legal document review, CRM, and financial data are seen as vulnerable.
Massive Capital Expenditure Concerns: Tech giants like Alphabet and Microsoft are spending immense amounts of capital—upwards of $185 billion in 2026 for Alphabet—to build infrastructure. Investors are worried that these staggering costs will not translate into immediate profitability.
"Cannibalization" Fears: There is growing panic that AI models will replace, rather than enhance, human-driven service economies and existing software, eroding the revenue base of major tech companies.
Stock Market Volatility: The sell-off has wiped out hundreds of billions in market value, affecting not only software companies (Salesforce, Adobe) but also IT services and investment managers with heavy tech exposure.
Rising Costs in Hardware: Soaring memory chip prices have caused concern regarding the profitability of hardware suppliers, dragging down companies like Qualcomm and affecting the broader tech supply chain.
In short, the market is shifting from "AI euphoria" to "AI skepticism," questioning whether the high-cost, high-speed development of AI can sustain the valuations of the software sector.