Software Company Bonds Drop As Investors' AI Worries Mount (bloomberg.com)
- Reference: 0180680766
- News link: https://tech.slashdot.org/story/26/01/28/2214257/software-company-bonds-drop-as-investors-ai-worries-mount
- Source link: https://www.bloomberg.com/news/articles/2026-01-28/software-company-bonds-drop-as-investors-ai-worries-mount
> Investors are [1]souring on the bonds of software companies that service industries ranging from automotive to finance as fast-paced artificial intelligence innovations threaten to upend their business models. [...] Bond prices tumbled as advances in artificial intelligence rack up. Google [2]announced plans to launch an AI assistant to browse for internet surfers Wednesday while a customer support startup, Decagon AI Inc., raised a new round of funding. Such developments are further stoking the angst about AI displacing enterprise software companies, driving a selloff in the sector's stocks and bonds across the globe.
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> [...] Some say the AI fears weighing on software companies are overdone. "While point-solution software faces disruption risk, large company platforms with complex workflows and proprietary data are better positioned to benefit from AI-driven automation," wrote Union Bancaire Prive in its investment outlook for 2026 released this week. But a recent report by EY-Parthenon flagged that in the UK last year, software and computer services firms issued the highest number of warnings on earnings among listed firms.
"Software multiples have compressed amid uncertainty around whether incumbents can defend pricing power and sustain growth in an AI-first work-flow environment," wrote Bruce Richards, chief executive officer and chairman of Marathon Asset Management, in a LinkedIn [3]post last week.
[1] https://www.bloomberg.com/news/articles/2026-01-28/software-company-bonds-drop-as-investors-ai-worries-mount
[2] https://tech.slashdot.org/story/26/01/28/2149236/google-says-ai-agent-can-now-browse-on-users-behalf
[3] https://www.linkedin.com/posts/bruce-richards-6035771a9_software-susceptibility-software-multiples-activity-7420087917215223809-XKPO/?utm_source=share&utm_medium=member_desktop&rcm=ACoAACKfLwYBw82lIP34DhGWacMJav3-M6I9Pg4
My finance people have different AI concerns (Score:3)
Mainly that it's *not* living up to the hype and that way too much money is being spent on it.
I don't understand this downturn (Score:4, Interesting)
If AI were remotely capable of being a threat to these incumbents then we'd be seeing shitty competitors pop up everywhere. We're not though. Sure we see a lot of iffy code bases popping up claiming to do it but none have gained traction that I'm aware of.
Re: (Score:2)
Indeed. And AI-creted code has severe problems regarding security and maintainability. If those claimed productivity increases were real, we would see strong effects by now. The only effects I see so far is some software crashing more often. But that may have other reasons.
Re: (Score:3)
The problem lies with CEOs and the people around them. Most engineers and developers haven't been fooled, but CEOs are seriously vulnerable to accepting absurd ideas if someone “important” (or who can pass themselves off as important) swears that the idea in question will fill the company with money. Right here in my company, every now and then some director stupidly wants to copy the ideas of the “market” (which nowadays boils down to maximizing value for shareholders even if it DES
The crash is going to be ugly (Score:2)
When all this hysteria surrounding “AI” ends and people realize they've been deceived into yet another "tulip craze"... the crash will be ugly, very ugly.
Stupid. (Score:2)
> "Software multiples have compressed amid uncertainty around whether incumbents can defend pricing power and sustain growth in an AI-first work-flow environment," wrote Bruce Richards
"AI-first" isn't even viable as [1]Majority of CEOs Report Zero Payoff From AI Splurge [slashdot.org] and while some [2]CEOs Say AI is Making Work More Efficient. Employees Tell a Different Story. [slashdot.org]
I think they investments are being moved over to AI because they are running out of funds to prop it up in hopes that it will be successful.
[1] https://slashdot.org/story/26/01/20/2133237/majority-of-ceos-report-zero-payoff-from-ai-splurge
[2] https://slashdot.org/story/26/01/21/141239/ceos-say-ai-is-making-work-more-efficient-employees-tell-a-different-story
Re: (Score:2)
I think AI is being used as a fig leaf to cover a crumbling economy.
It is both an excuse " We laid off a bunch of people, but AI is doing their work now -everything is going great!" and something to chase for future returns (like a carrot on a string always just out of reach..) " The next version will do that! Keep investing... please? "
AI is cool. We can do things that were science-fiction back in the day. Just don't buy the marketing hype. What it is and what they are selling are worlds apart.
Re: (Score:2)
Well, maybe. May depend on the reasoning. It may just be "software companies are going to force AI use and their products will turn to crap". And that would be entirely sensible. No idea how realistic this is though. But sacking people and not hiring junior people will definitely cause huge problems for software makers.
The "AI will make software makers obsolete" narrative is obvious nonsense, I fully agree.