Why software stocks are getting pummelled • Hacker News Board

Re: Why software stocks are getting pummelled

#41

Post by rglullis » Mon, Feb 02, 2026, 8:06 PM UTC

lateforwork wrote: post #6

> The fear is that these [AI] tools are allowing companies to create much of the software they need themselves. AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company.

> AI-generated code still requires software engineers

No, they don't.

A domain expert armed with an Excel spreadsheet and the ability to write VBA macros will be enough for most business.

Re: Why software stocks are getting pummelled

#42

Post by wtp1saac » Mon, Feb 02, 2026, 8:06 PM UTC

wtp1saac wrote: post #33

Certainly no investor, but my own feelings: AI replacing vendors feels like a strange risk, though I'm not sure if vendors view things through a technical lens. Security concerns and service maintenance alone, IMO, makes writing internal software a large proposition - one that I would want a trusted vendor if it wasn't a hobby project and I could just afford that. Particularly if that data being lost or broken would…

I would add: open source throws additional curveballs. The EU wants to push for open source, and that is admirable, but I wonder what the sustainable funding model would be, and how that could attract attention. I wonder about business models and ability to generate return on investment.

I would think the saner solution is allowing proprietary companies, but imposing technical standards which companies collaborate on, enabling interoperation. Am I mistaken, that the EU is trying to do this with the DMA? I have heard general overtones, but I haven't looked at it very closely, and our media doesn't cover EU tech regulations in much detail in the US, though in a decent world it would, I wish it would.

Re: Why software stocks are getting pummelled

#43

Post by keeda » Mon, Feb 02, 2026, 8:06 PM UTC

lateforwork wrote: post #6

> The fear is that these [AI] tools are allowing companies to create much of the software they need themselves. AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company.

Hmm, I wonder if it would be cheaper to hire a couple of software engineers to vibe-code custom SaaS apps on top of the company's existing data layer instead of paying for a hundred different SaaS subscriptions.

Financial considerations aside, one advantage of having in-house engineers is that you can get custom features built on-demand without having to be blocked on the roadmap of a SaaS company juggling feature requests from multiple customers...

Re: Why software stocks are getting pummelled

#44

Post by eknkc » Mon, Feb 02, 2026, 8:07 PM UTC

iamleppert wrote: post #20

Meanwhile, in the real world, as a software developer who uses every possible AI coding agent I can get my hands on, I still have to watch it like a hawk. The problem is one of trust. There are some things it does well, but its often times impossible to tell when it will make some mistake. So you have to treat every piece of code produced as suspect and with skepticism. If I could have automated my job by now and bee…

Yeah but just look at what happened within the last 2 years. I was not convinced about the AI revolution but I bet in another 2 years, we won't be looking at the output..

Re: Why software stocks are getting pummelled

#45

Post by tjr » Mon, Feb 02, 2026, 8:07 PM UTC

llmslave wrote: post #5

Software will be easy to create, which will kill moats and margins on existing products. The game is up for pure saas. Smart money started pricing this in one year ago

What would be some examples of some current software products for which you expect the game is up?

Are there any software products that you think will survive?

Re: Why software stocks are getting pummelled

#46

Post by tossandthrow » Mon, Feb 02, 2026, 8:08 PM UTC

lateforwork wrote: post #6

> The fear is that these [AI] tools are allowing companies to create much of the software they need themselves. AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company.

That would justify a good multiple of 5 to 10. Not 30 or above as for high growth companies.

Re: Why software stocks are getting pummelled

#47

Post by likium » Mon, Feb 02, 2026, 8:10 PM UTC

grwbx wrote: post #26

What an odd article that is just designed to hype the software creation aspect, which doesn't really affect MAGAF. MSFT went down because of overexposure in AI and because it is clear that people do not want it. AI weariness is a thing, and if people go off the Internet or advertisers question whether humans or AI swarms are "watching" their ads it is over for the big players. Trying to salvage the situation by hypin…

HN crowd did not like AI coding until it got better. How much of the AI hate is because of poor implementation?

Re: Why software stocks are getting pummelled

#48

Post by zdw » Mon, Feb 02, 2026, 8:11 PM UTC

rglullis wrote: post #41

lateforwork wrote: post #6

> The fear is that these [AI] tools are allowing companies to create much of the software they need themselves. AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company.

> AI-generated code still requires software engineers No, they don't. A domain expert armed with an Excel spreadsheet and the ability to write VBA macros will be enough for most business.

Excel spreadsheets have little to no validation logic that you're actually getting a good result, unless you have a secondary check (most spreadsheets are structured as "single entry" accounting, so lack the checks)

A prime example of this was the Reinhart/Rogoff paper advocating austerity that was widely quoted, and then it was discovered that the spreadsheet used had errors that invalidated the conclusions:

https://en.wikipedia.org/wiki/Growth_in_a_Time_of_Debt#Metho...

Just because technology is in use and "works" doesn't mean it's always correct.

Re: Why software stocks are getting pummelled

#49

Post by cedilla » Mon, Feb 02, 2026, 8:12 PM UTC

bryanlarsen wrote: post #32

idle_zealot wrote: post #8

Earlier quoted context omitted.

Was the hard part ever really the software, though? It's the Service part of SaaS that seems to provide the moat. Lock-in, habits, workflows, integrations, and trust. And don't discount the appeal of making some part of your operations "someone else's problem." Could you hire engineers or use an LLM to make your own Google Docs? Probably, yeah, but would that be worth the headache of being responsible for a bespoke i…

The article is about SAP, Salesforce, etc. Making your own Google Docs is stupid unless your company's core business is document management. OTOH Replacing SAP with a bespoke system will make a lot of sense for many companies. SAP is already the worst of both worlds. It'll have been highly customized for your flow so you've got all of the headaches of bespoke software and all of the headaches of SaaS. And unlike Goog…

Companies pay millions and millions to get away from bespoke software, but not simply because of the costs. Companies want to do their core business, they don't want to also be a software enterprise, and assume all the risks that entails. Even if AI makes creating software 10 times less expensive, that doesn't really change.

Re: Why software stocks are getting pummelled

#50

Post by SimianSci » Mon, Feb 02, 2026, 8:12 PM UTC

The Value of software is going down, this much is clear to most people. It will continue to demand proper engineering for its creation and operation. But AI will lead to an increase of unique one-of-a-kind systems created by very small teams. And the world will increasingly rely on these unique systems.

SaaS companies need to start reading the writting on the wall, their massive valuations enjoyed when software was harder to create will need to be justified.