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Markets Are Being Shaken and Repricing Software for the AI Era
3 min read.
Midas AI
August 13, 2025
A sharp sell off in European and US software names shows investors are no longer treating AI as a sidecar feature. They are asking which companies will control the context that makes AI valuable.
On August 12, 2025, European software stocks fell on concerns about risks that artificial intelligence could pose to the sector. SAP declined more than 6 percent intraday and was last down 5.5 percent, briefly on track for its biggest one day drop since October 2020. Dassault Systemes, Sage, and Nemetschek fell between 4 percent and 10 percent. The European tech sector was the worst performer on the day.
A trader said the declines mirrored moves among U.S. software peers on Monday, naming Adobe, Salesforce, Intuit, and Workday. Melius Research downgraded Adobe to sell. A MarketWatch article that examined the potential impact of AI on software companies was cited as a factor behind the declines.
Market Signals a Structural Reset
This is not just beta and macro. Markets are digesting a structural reset in enterprise software. When a cross section of incumbents sells off at once with a bellwether like SAP leading, the message is broader than one product cycle.
Investors are responding to a clear signal in the narrative around AI. If AI can automate more of what sits in application layers, then the power in the stack shifts to whoever controls the business context that guides those automations. The models matter, but without deep workflow context they are interchangeable.
That is why the market is asking hard questions about software companies whose AI story lives at the edge of their products rather than inside the workflow pipes that customers already trust.
U.S. Declines Reinforce the Trend
The U.S. echoes reinforce the point. Adobe’s downgrade to sell in the same window underlines a marketwide reassessment of how defensible software moats look when AI features can be quickly replicated.
Salesforce, Intuit, and Workday appearing alongside Adobe in the trader’s comment is telling. These are firms with strong franchises and data advantages. Yet even they are pulled into the broader repricing when investors weigh the balance between standalone AI features and integrated AI that is embedded in systems customers rely on every day.
The MarketWatch piece cited by the trader amplifies this by focusing attention on AI’s potential impact on software business models, not just product demos.
What This Means for Builders and Operators
For founders, developers, and operators, the read through is direct. The value layer in enterprise AI is shifting upstream. Control the context, not just the model.
That means designing AI to live where decisions, permissions, and data quality are already governed. It means making AI a property of the workflow itself rather than an add on bot that sits beside it.
When AI is wired into the processes that matter, switching costs rise, outcomes become measurable, and the vendor’s position strengthens. If the market is penalizing companies for vague or bolt on AI narratives, it is rewarding those that can show AI anchored in core workflows and data with clear paths to productivity and retention.
None of this says incumbents are doomed or that challengers automatically win. It says the battleground has moved. A sector wide decline that hits European and U.S. names on the same theme is a signal that investors want to see AI strategies tied to durable control points.
They are looking past model novelty to the unglamorous work of integration, governance, and outcomes inside the software customers already depend on. Companies that can demonstrate that connection will separate themselves from those relying on surface level features.
The market just issued a progress report on enterprise AI. The headline is not hype fatigue. It is a reprioritization. AI is judged by where it is embedded and what context it can command. For teams building and buying software, align with that reality. The value is upstream.