Nvidia CEO Jensen Huang has firmly dismissed the recent market panic that wiped over $250 billion from global software stocks, defending the software industry against fears that artificial intelligence will render it obsolete. The chief executive of the world's most valuable company labeled these concerns as "the most illogical thing" during a recent AI conference in San Francisco hosted by Cisco Systems.
Huang's Defense of Software Industry
Speaking at the artificial intelligence conference, Huang argued that the notion of AI replacing software companies is fundamentally misguided. According to reports from The Business Times, he emphasized that AI will continue to rely on existing software tools rather than rebuilding them from scratch.
"There's this notion that the tool in the software industry is in decline, and will be replaced by AI ... It is the most illogical thing in the world, and time will prove itself," Huang stated. "If you were a human or robot, artificial, general robotics, would you use tools or reinvent tools? The answer, obviously, is to use tools ... That's why the latest breakthroughs in AI are about tool use, because the tools are designed to be explicit."
The Trigger: Anthropic's New Tool
The market selloff began after AI startup Anthropic released 11 open-source plugins for its Claude Cowork tool in late last month. This triggered what analysts are calling a "SaaSpocalypse" – a widespread panic in software-as-a-service stocks.
Claude Cowork is an AI assistant designed for non-technical professionals, capable of managing files, drafting documents, and automating workflows. One particular plugin that caused significant concern was for legal work, which automates contract reviews and compliance checks. Despite disclaimers requiring attorney review, this legal plugin sparked widespread investor fear about AI disruption in professional services.
Global Market Impact
The panic spread rapidly across global markets, hitting software stocks particularly hard:
- Legal tech stocks suffered significant losses with Thomson Reuters dropping over 15%, RELX falling 14%, and LegalZoom declining nearly 20%
- In India, Infosys ADRs slipped 5.5% while Wipro fell nearly 5%
- Domestic IT exporters in India slumped 6.3%, with Infosys taking the worst hit at a 7.3% decline
- China's CSI Software Services Index fell 3%, while Hong Kong's Kingdee International Software Group dropped more than 13%
- In Japan, staffing agency Recruit Holdings fell 9% and Nomura Research declined 8%
Investor Psychology and Market Reaction
The episode highlights how quickly investor sentiment can shift in response to perceived technological disruption. Huang's comments represent a significant pushback against what he views as irrational fear in the market. His argument centers on the fundamental nature of tools in technology – whether human or AI-powered systems, they rely on existing frameworks rather than constantly reinventing basic infrastructure.
The Nvidia CEO's perspective suggests that rather than replacing software companies, AI will actually increase their value by creating more sophisticated tools that build upon existing software foundations. This contrasts sharply with the market's initial reaction, which assumed that AI tools like Anthropic's plugins could directly compete with established software services.
As the dust settles from this market volatility, industry observers will be watching to see whether Huang's confidence in the software industry's resilience proves accurate, or whether AI-driven disruption will continue to create uncertainty in technology stocks worldwide.
