Global software stocks extended a sharp selloff this week as investor anxiety intensified over the potential disruptive impact of artificial intelligence on traditional software and professional services. The latest wave of volatility was triggered in part by an updated chatbot release from AI developer Anthropic, which revived fears that increasingly capable AI systems could reduce the relevance of existing software tools.
Against this backdrop, Nvidia CEO Jensen Huang publicly rejected claims that AI would replace software, describing such fears as fundamentally flawed.
Huang Dismisses Software Replacement Narrative
Speaking at an artificial intelligence conference in San Francisco hosted by Cisco Systems, Huang said concerns that AI would make software companies obsolete were misguided. He argued that AI systems depend on existing software infrastructure rather than replacing it, and that the idea of rebuilding core tools from scratch made little sense.
Huang described the belief that AI would replace software tools as “illogical,” insisting that both humans and machines naturally rely on tools rather than reinventing them. He said recent advances in AI actually reinforce this logic, as the latest breakthroughs focus on enabling AI to use tools more effectively, not eliminate them.
AI’s Dependence on Existing Tools
Huang emphasized that tools are designed to be explicit and purpose-built, making them essential to how AI systems operate. Rather than undermining the software industry, he suggested AI will deepen reliance on existing platforms, programming frameworks, and digital tools that allow intelligent systems to function at scale.
His remarks aimed to counter the growing narrative that generative AI threatens the foundations of the software sector.
Market Reaction Across Asia
Despite Huang’s reassurances, the selloff in software stocks broadened on Wednesday, spreading across Asian markets. Indian IT exporters were among the hardest hit, with the NIFTY IT index falling 6.3%. Infosys was a major casualty, plunging 7.3%.
In China, the CSI Software Services Index dropped 3%, while in Hong Kong, shares of Kingdee International Software Group tumbled more than 13%. Japanese stocks also suffered heavy losses, with Recruit Holdings and Nomura Research sliding 9% and 8% respectively.
Investor Anxiety Persists
The widening losses suggest investors remain unconvinced that AI-driven disruption will leave existing business models intact. Concerns appear especially acute in data services, consulting, and IT outsourcing sectors, where AI adoption could reshape workflows and pricing structures.
Analysis
Huang’s comments reflect a long-term, infrastructure-focused view of AI that clashes with short-term market psychology. While investors are reacting to the fear that AI could hollow out software demand, his argument reframes AI as an amplifier rather than a replacement. Historically, technological revolutions have tended to increase reliance on tools, not erase them, and AI may follow the same pattern.
That said, markets are often less concerned with whether software disappears than with how value shifts within the ecosystem. Even if tools remain essential, AI could compress margins, redistribute profits, or weaken certain service-heavy business models. The selloff may therefore be less about extinction and more about uncertainty over who ultimately captures value in an AI-dominated economy.
With information from Reuters.
