For years, enterprise software was the "safe bet" of Wall Street—predictable, subscription-based, and essential. But today, a "double-whammy" of disappointing outlooks from industry titans has sent the sector into a tailspin, as investors begin to fear that artificial intelligence isn't just a tool for these companies, but a potential replacement for them.
The tremors started with SAP, which saw its shares plunge more than 16%—its biggest daily loss in years—after issuing a 2026 revenue forecast that fell short of analyst expectations. The German giant’s cautious cloud outlook served as a warning light for the entire industry.
Closely following was ServiceNow, which dropped 11%. Despite reporting subscription revenue that actually beat estimates, the results weren't "convincing enough" to drown out the growing narrative that AI disruption might eventually shrink the market for traditional workflow tools.
For the first time in a decade, the "Software as a Service" (SaaS) model is being questioned. As AI agents and autonomous coding tools become more capable, the traditional software giants are racing to reinvent themselves through massive M&A deals and new AI-integrated features.
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