Nvidia CEO Jensen Huang Says the Thinking Behind This Stock Sell-Off Is “Illogical” | The Motley Fool

Investors are worried that the biggest losers of the artificial intelligence (AI) revolution might be technology companies. Recent improvements in AI models and the release of new AI tools from Anthropic have sparked fears in the market that AI might disrupt the business models of, or even replace, companies that sell software as a service (SaaS companies).

This tech stock sell-off is already being branded by some as the “SaaSpocalypse.” The idea driving this tech stock downturn is that if AI gets good enough, companies that buy expensive business software might not need to buy so much of it. Or they might be able to use AI to build their own software, or maintain and upgrade their own software, without paying for ongoing support.

If this story proves correct, major software companies that have built lucrative businesses by selling enterprise software subscriptions might no longer be so valuable — or might not be needed at all. The harshest effects of this turn in sentiment can be seen in the share prices of companies like Salesforce (CRM 0.30%), Microsoft (MSFT 0.09%), and Adobe (ADBE 0.84%). The Nasdaq-100 index is down almost 5% in the past five days as I write this and nearly 3% year to date.

CRM data by YCharts

But there’s one problem with the SaaSpocalypse story: It might be totally false. Investor fears about software being replaced with AI might be overblown.

Jensen Huang isn’t buying the SaaS stock sell-off

Jensen Huang, CEO of Nvidia (NVDA 0.80%), at a…