Artificial intelligence is creating one of the most dramatic divergences markets have seen in decades — and software companies may be on the wrong side of it. Meanwhile, Nvidia Corp (NASDAQ:NVDA), which sells the chips powering this shift, continues to emerge as one of the biggest beneficiaries of the AI spending surge.
AI's Biggest Winners And Losers Are Emerging
According to Citrini Research, AI is setting off a powerful feedback loop. Companies deploy AI to cut labor costs. They then reinvest those savings into more AI, accelerating the very disruption that forced the cuts in the first place.
"AI capability improves, payroll shrinks, spending softens… capability improves," a recent Citrini report explains, describing "a feedback loop with no natural brake.”
This dynamic is already reshaping the economics of enterprise software.
AI Is Starting To Break SaaS Pricing Power
For years, SaaS companies thrived on recurring revenue and high switching costs. But agentic coding tools like Claude and Codex are rapidly eroding those advantages. A “competent developer” who works with Claude Code or Codex could replicate the core functionality of a mid-market SaaS product in weeks.
That shift is fundamentally changing enterprise negotiations. In one example cited in their report, a Fortune 500 company renewed a major SaaS contract at a 30% discount after considering replacing the vendor with internally developed AI tools.
This creates a structural threat to software firms whose business models depend on pricing power and recurring licenses. Companies like Salesforce Inc (NYSE:CRM), ServiceNow Inc (NYSE:NOW), and Atlassian Corp (NASDAQ:TEAM) could face long-term margin pressure as AI lowers the cost of building and maintaining software.
Nvidia And The AI Infrastructure Complex Keep Winning
Ironically, the companies enabling this disruption continue to benefit enormously.
Even as AI threatens large parts of the software sector, the firm notes that "NVDA was still posting record revenues" and AI infrastructure providers continued operating at near-full capacity.
That divergence highlights a fundamental shift in market leadership. As AI reduces the value of human labor and software intermediaries, the companies providing the underlying compute may capture a growing share of economic gains. All this while SaaS companies face the unintended consequences of the technology they helped popularize.
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