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a16z
2026-07-21 04:33:34

a16z Says AI Is Lifting Software Hiring, While Markets Draw Sharper Lines Across Software Stocks

Andreessen Horowitz’s latest market note argues that the current reset in software is not a blanket collapse but a sorting process, with investors rewarding companies seen as having stronger AI defenses or tailwinds and punishing others. The piece says valuation multiples on next-twelve-month free cash flow for software companies have fallen to or below 2014 levels, reflecting skepticism about long-term durability rather than near-term results. The note also pushes back on the idea that AI is already destroying entry-level work. Citing data discussed in the report, software developer job postings have risen about 14.6% since the release of Claude Code, even as the broader market fell about 7%. It also points to Revelio, Ramp, ADP, OpenRouter, YipitData, PNC Bank, Indeed Hiring Lab, Lawrence Berkeley National Laboratory, The Brattle Group and EIA data to argue that cheaper intelligence is expanding demand, that firms with heavier AI adoption have seen stronger entry-level hiring trends, and that states adding more data center load have not necessarily seen higher electricity prices. Across software equities, labor, token consumption and energy, the article’s central claim is consistent: lower AI costs are broadening usage, and current labor-market data does not support the view that AI is making human workers obsolete.

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a16z Says AI Is Lifting Software Hiring, While Markets Draw Sharper Lines Across Software Stocks
AI coding
2026-07-16 02:31:23

Why cheap AI-generated code may not be enough to break SaaS

A BlockTempo report uses what writer Joan Westenberg calls the “bread paradox” to argue that lower software creation costs do not automatically destroy the software-as-a-service business. The comparison is simple: bread machines are cheap, ingredients are inexpensive, and recipes have been available for thousands of years, yet consumers still buy commercially made bread at scale. The same logic, the article argues, applies to enterprise software. Companies do not pay vendors such as Notion, Jira, or Basecamp merely for code. They pay for maintenance, compliance work, security review, integrations, certifications, support systems, and the ability to offload operational risk. The report also points to evidence that AI-generated software is not a clean substitute for managed services. It says research shows major defects in AI-generated code appear at roughly 1.7 times the rate found in human-written code. Gartner, meanwhile, has observed enterprise SaaS renewal increases still commonly landing in the 10% to 20% range, suggesting buyers are continuing to pay even as AI coding tools improve. A January 2026 report from Avenir found that 63% of enterprise buyers expect existing software vendors to benefit from generative AI, while only 8% expect them to be harmed. In this view, the most exposed products are thin, single-function tools, while deeper software supply chains remain intact.

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Why cheap AI-generated code may not be enough to break SaaS
IBM
2026-07-14 22:43:43

IBM sinks 25% after preliminary Q2 miss, dragging software stocks lower

IBM shares fell as much as 25% in Tuesday trading after the company released preliminary second-quarter results on July 14 that came in below Wall Street expectations, marking its biggest single-day drop since 1968. The company reported preliminary revenue of $17.2 billion, versus analyst expectations of $17.9 billion. Chief Executive Arvind Krishna told investors IBM had not adjusted quickly enough internally, which delayed several large deals and left a revenue gap in the quarter. He also said customers are shifting capital spending away from traditional software and services and toward AI infrastructure, including chips and servers. The read-through hit other software and IT services names, with Microsoft, Workday, Salesforce, and Autodesk all falling on Tuesday. The move added to a wider split already seen across the technology sector in 2026: the iShares Expanded Tech-Software Sector ETF has fallen more than 12% this year, while the Philadelphia Semiconductor Index has risen more than 78%, pointing to a sharp divergence between hardware and software valuations.

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IBM sinks 25% after preliminary Q2 miss, dragging software stocks lower