Episode summary
Dylan Jovine | Should You Sell These 9 Software Stocks ASAP?
Summary
Dylan Jovine argues that the Nasdaq selloff is being driven less by rates or earnings and more by AI beginning to erode the software sector’s core business models. He compares the current moment to the early backlash in biotech when GLP-1 drugs started threatening companies built around related treatments, saying AI is now doing the same thing to legal, financial, and data software.
He points to Anthropic’s Claude Co-work as a concrete example, saying it can automate legal drafting and research tasks that companies like Thomson Reuters and LegalZoom sell access to, while agents can also pull data directly from the SEC and other public sources. Jovine says that pressure is hitting a broad group of names including London Stock Exchange, S&P Global, MSCI, Intercontinental Exchange, and FactSet Research, because investors are starting to question whether these firms still have durable competitive advantages.
Jovine says his own business is adapting by pushing employees to use AI to make work faster, better, and cheaper, and he believes many corporate teams are doing the same. His view is that companies that fail to respond quickly could become less competitive over the next three to five years, while the market keeps rewarding AI players at the expense of legacy software.
Key takeaways
- Jovine says AI is the main reason software stocks are selling off, not just macro fears or earnings misses.
- He says Claude can automate legal drafting and research, directly challenging Thomson Reuters and LegalZoom.
- He warns that S&P Global, MSCI, Intercontinental Exchange, London Stock Exchange, and FactSet face pressure because AI agents can fetch similar data from public sources.
- Jovine argues that Buffett-style durable competitive advantage is disappearing faster in software than many investors realize.
- He says his own company is mandating weekly AI meetings to avoid being outcompeted.
- He thinks the market is transferring wealth from legacy software companies to a small group of AI winners.
Notable quotes
“today I'd like to talk about how the software sector is really getting its lunch eaten by AI”
“Anthropic, which makes this AI app called Claude Co-work, really released a tool that actually helps automate a number of legal drafting and research tasks”
“There are entire business models, companies, stocks that basically, that's one of the big things they do”
“I don't understand their competitive response to an AI agent that does what they do for free”
“if we don't adopt this, we don't start moving on AI, then we're going to get out competed”
How the episode opens
Good morning. This is Dylan Joan with Behind the Markets. Happy Friday.
Today is Friday, February 6th, TGIF. Anyway, today I'd like to talk about how the software sector is really getting its lunch eaten by AI. And this is really led to the selloff that we've seen this week in the NASDAQ.
Really, AI is starting to really chew up and eat a lot of these software companies. And it reminds me very much of how back when we were talking about ompic and the weight loss drugs in 2022 really before that hit the consciousness you saw a lot of biotechs that made a lot of mash related drugs getting hammered because we were seeing in early data that these weight loss drugs these glip one drugs were just very effective and not just treating weight loss but a bunch of other associated conditions. We're seeing the same things start to happen with AI stocks attacking the software sector.
For example, this week, Anthropic, which makes this AI app called Claude Co-work, really released a tool that actually helps automate a number of legal drafting and research tasks. Now, think about that. There are entire business models, companies, stocks that basically, that's one of the big things they do.
That's one of the big things that they do to generate money. And here we are, Claude is releasing that for free. So, of course, Thompson Reuters Legal Zoom collapsed.
Their stocks collapsed. The London Stock Exchange, which has moved heavy into data, has also started to get hammered. And all of these companies basically provide some form of legal tools or research databases.
and they all fell, you know, more than 12% this week. So the question really is, and it's not just legal companies that are getting hammered.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai disruption of software
- nasdaq selloff
- software competitive moats
- ai agents automating workflows
- etf and retirement account exposure
Companies and tickers mentioned
- Anthropic
Watch the episode
Watch “Dylan Jovine | Should You Sell These 9 Software Stocks ASAP?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Behind The Markets Podcast
-
Nvidia CEO Out: 4 Reasons I’m Not Panicking About Nvidia -
The Mag 7 Sell-Off: My 3 Secrets to Picking Stocks -
Morgan Stanley’s AI Winners List Is Full of Bank Stocks -
Anthropic IPO: Why I’m Not Rushing to Buy at $1 Trillion -
Chip Stocks Sell-Off: Why the AI Build-Out Just Went From 3 to 5 Years -
Midterm Election Results: The Stock Market’s Winners and Losers
Behind The Markets Podcast, this episode and its artwork belong to their owners. Octagon is not affiliated with the show; this page is an independent summary.
