Nvidia’s Huang says software sell-off ‘wrong’, market watchers agree
Nvidia ‘s Jensen Huang was right when he told CNBC investors “got it wrong” over AI fears that drove them to sell off software stocks, market watchers have said. Software stocks have been caught up in a sell-off that dragged the sector into bear market territory, amid fears AI could make software as a service — or SaaS — obsolete. It has been dubbed the “Saaspocalypse.” Speaking to CNBC’s Becky Quick after the bell on Wednesday as the chip maker reported earnings, the Nvidia CEO said investors had overestimated the impact AI would have industry. “I think the markets got it wrong,” Huang told Quick, calling the sell-off “counterintuitive.” He added that AI agents would not displace traditional software tools like internet browsers and Microsoft Excel, but will “use these tools on our behalf and help us be more productive.” “I think he’s right,” Siddy Jobe, senior portfolio manager at Econopolis Wealth Management, told CNBC’s “Squawk Box Europe” on Thursday. “The tools are there and will be amplified by AI and as such will be used more. It will be more evident for the companies like Salesforce and ServiceNow, where previously people wouldn’t pay, now they will because they will become more efficient.” Salesforce ‘s stock moved lower after its fourth-quarter earnings on Wednesday, and was down 4% ahead of Thursday’s opening bell. ServiceNow , which Huang called a leader in service software during his CNBC interview, was last seen trading around 0.9% higher. However, Jobe cautioned that “not all companies are equal.” “I would buy names in what I call AI infrastructure software,” he said, describing these as software vendors that help AI developers train and improve their models. Jobe cited U.S. firms Snowflake and Datadog as examples he said were “right to be picked up at this moment in time.” Neil Shah, VP of research and cofounder of Counterpoint Research, told CNBC on Thursday that “the market got it partly wrong” in rotating out of software en masse. “There is cannibalization happening, but this is a pivotal moment for SaaS companies to pivot their business model — right now it has been more of a service-based model,” he said, adding that SaaS firms would move from service-based models to outcome-based models as they started deploying AI agents. “That transition has to happen fast for many of these SaaS companies, [and] whoever does that first will capture most of the market in this particular era … especially in the next two years,” he said. Mitchell Green, founder and managing partner of Lead Edge Capital, agreed with Huang. “The legacy software companies are going to work with new software anytime there’s periods of disruption,” he told CNBC’s “Europe Early Edition.” “You have legacy software companies, compete with new types of incumbents — some incumbent, some new companies, will win. Sometimes the legacy companies take it away. But let’s not forget, IBM [is] still selling mainframes that it started [in the] 1950s.” Earlier this week, analysts at HSBC said in a note that software will majorly benefit from AI becoming mainstream. “Software is already eating AI,” they said. “As profitable as AI has been for the hardware/semiconductor sectors, we see the lion’s share of value being generated within the software sector — a sector that has been planning and building agentic AI for the past two years, with a kick-off in 2026.” In pre-market trading on Thursday, many big software names were mixed. Intuit was marginally higher, while Microsoft was down 0.3%. Cisco and CrowdStrike shares were around 0.5% lower. HP added 0.7%, CoreWeave was up 0.3%, and IBM shares jumped 0.7%. Nvidia added almost 1% after it posted stronger-than-expected earnings on Wednesday, while German software giant SAP was 0.9% higher in the European trading session.
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