Anthropic’s Latest AI Model Sends a Shockwave Through Software Stocks
Software stocks plunged Thursday as investors grappled with the implications of increasingly capable AI models.
Shares of Palantir (PLTR), ServiceNow (NOW), and Intuit (INTU), three of America’s largest software companies, dropped between 6% and 8% to rank among the S&P 500’s biggest decliners, on a day when broader markets gained. Salesforce (CRM), which lost 3%, was the worst-performing stock in the Dow Jones Industrial Average.
AI startup Anthropic on Tuesday announced the development of Claude Mythos, a frontier AI model so powerful that it’s not being released to the public. The company indicated it’s granted access to about 50 organizations so far, including leading cybersecurity firms, “so they can use the model to scan and secure both first-party and open-source systems.”
Project Mythos, the company said, “reveals a stark fact: AI models have reached a level of coding capability where they can surpass all but the most skilled humans at finding and exploiting software vulnerabilities.” Anthropic researchers on Tuesday called the model “a step-change in [cybersecurity] vulnerability discovery and exploitation” and warned that in safety tests it demonstrated “a potentially dangerous capability for circumventing our safeguards.”
Project Mythos breathed fresh life into concerns that AI models could upend software-as-a-service, once one of the Wall Street’s favorite industries because of its high margins and reliable revenue streams. Those fears weighed on software stocks throughout the first months of the year, in what’s been called the “SaaSpocalypse.” Software stocks got some relief last month as investors turned their attention to the war in Iran and soaring oil prices, to which tech companies are less sensitive than others.
Many investors will likely be looking to upcoming earnings reports and comment from tech executives to explain how incumbents are implementing AI internally and defending their businesses from AI native upstarts. Meanwhile, heavyweight AI startups Anthropic and OpenAI are widely expected to file for initial public offerings later this year or early 2027.
The iShares Expanded Tech-Software Sector ETF (IGV) on Thursday afternoon was down 4% to its lowest level since late 2023. The fund has lost nearly 28% of its value since the start of the year.
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