Software Armageddon: Part Deux
Software short interest is at historic highs...
Just over one month ago I published an article titled Software Armageddon.
In my closing I noted:
“I do think it’s still a bit early and I’m not rushing out to buy tomorrow. I know many are eager to start bidding but in my opinion, now isn’t the time to be aggressively buying. That said, it is a good time to start poking around into the fundamentals and really understand the stories behind these names.”
I remember how eager everyone was to buy the dip back and ever since then, software has just gone lower.
The hits just keep coming. It feels like Anthropic is intentionally trying to nuke the entire software sector, it would actually be a pretty profitable idea if they had their own team of quants trading in the background.
“We’re about to drop Claude Code Security, go buy some puts on Crowdstrike and Cloudflare.”
Free money!
Seriously though, they’re relentless. Just in the last week, here are all of the headlines and products Anthropic has dropped:
“New in Cowork: scheduled tasks. Claude can now complete recurring tasks at specific times automatically: a morning brief, weekly spreadsheet updates, Friday team presentations.”
“New in Claude Code: Remote Control. Kick off a task in your terminal and pick it up from your phone while you take a walk or join a meeting. Claude keeps running on your machine, and you can control the session from the Claude app or http://claude.ai/code”
“Introducing Cowork and plugin updates that help enterprises customize Claude for better collaboration with every team.”
“Now in research preview: Claude can work across Excel and PowerPoint end-to-end, running analysis in one and building the presentation in the other. Available for all paid plans on both Mac and Windows.”
“Claude Code on desktop can now preview your running apps, review your code, and handle CI failures and PRs in the background.”
“Introducing Claude Code Security, now in limited research preview. It scans codebases for vulnerabilities and suggests targeted software patches for human review, allowing teams to find and fix issues that traditional tools often miss.”
That’s nearly one per day over the last week, and it doesn’t seem like they’re letting up. You can connect each of these headlines to a public company it impacts, and if you look at the stock chart, the result is clear. Investors see the headline, determine the company/stock they own is going to 0, and sell. Anthropic is going to eat every software company alive, market participants are saying.
The narrative is widespread. Could it be starting to grow thin?
The iShares Expanded Tech Software Sector ETF (IGV) is approaching its April 2025 “Liberation Day” tariff lows, down nearly 15% so far in February. It’s also on pace for its worst month since the Great Financial Crisis. Everywhere you look, there is panic in software land.
Could now finally be the opportunity?
Over the last few weeks I’ve spent time researching and debating whether or not software wins because of AI. I think I came to a final conclusion…
In the remainder of this article I’m going to discuss how I plan to navigate this sector going forward along with the new software position I took.