Matt Goldstein, Chief Investment Officer
Now, when it comes to the markets and real investing, you have to be a lot more serious than goofing off about Gatorade.
Last week, we discussed how artificial intelligence is becoming the ultimate "efficiency mandate," helping companies cut costs and boost productivity. But in the markets, we're seeing the other side of that coin. A dramatic "valuation reset" for the companies that actually sell the software we've used for decades.
While AI is a tailwind for the companies using it, it has suddenly become a massive headwind for the companies that sell it.
The Software Slump: By the Numbers
There has been a visible sea of red in the tech sector recently. This isn't just a minor "dip"; it's a historic move in some of the most stable names in the market. Here's how some of the "Blue Chips" have performed Year-to-Date as of early February 2026:
- Microsoft (MSFT): Down 16.8%. The world's software anchor has seen its stock retreat significantly as investors question if its massive AI investments will pay off fast enough.
- Salesforce (CRM): Down 25.9%. Despite launching its own AI agents, the market is "selling first and asking questions later."
- Palantir (PLTR): Down 26.1%. While Palantir has been an AI darling, even it hasn't been immune to the broader software selloff.
For perspective, the IGV Software ETF (the "index" for these companies) has seen a Year-to-Date loss of 24.6%. In just the opening weeks of 2026, the software sector has seen over $1 trillion in market value simply vanish.
What is "SaaS"?
You will hear this term a lot in the news right now. SaaS stands for Software as a Service. In short: instead of buying a piece of software and installing it once, you "rent" it over the internet through a monthly or yearly subscription. Think of Netflix for business tools. Most of the companies mentioned above make billions by charging companies a "per user" monthly fee for this access.
Why Is This Happening? Meet "Vibe Coding"
The biggest threat to these companies isn't just a better competitor; it's a new way of creating software called "Vibe Coding." Popularized by the Claude bot, vibe coding allows a person with zero technical skills to build a functional app by "talking" to the AI.
- How it works: You describe the "vibe" or the goal—for example, "Build me a dashboard that tracks my sales and sends me a text every morning"—and the AI writes the code, sets up the database, and creates a working tool instantly.
- Why it's risk: For years, companies have paid thousands of dollars to SaaS providers for niche tools. Now, an employee can "vibe code" a custom internal tool in an afternoon for nearly free. Why pay for a subscription when you need a prompt?
The "Moltbook" Moment
To give you an idea of how fast this is moving, look at Moltbook. It is a "social network for AI agents only"—a place where humans are only allowed to observe while more than 1.5 million AI agents interact and collaborate at machine speed.
This isn't science fiction; it's a demonstration of how AI is moving beyond humans talking to computers, to computers talking to computers. That's right—in the last month, an entire social network like LinkedIn or Reddit for AI agents has formed where no humans are allowed to participate.
The Bottom Line: From Abundance to Scarcity
The speed of change in technology is exponential, not linear. We are entering an era where AI is making things that are non-tangible—like software code and basic intelligence—abundant and virtually free. When the cost of producing software drops toward zero, its market value shifts dramatically.
As a result, we may be moving toward a market that places a much higher premium on things that remain scarce and tangible: physical infrastructure, energy and food production, and the raw materials needed to power this digital revolution.
Short-term, fast market reactions don't necessarily mean long-term change for every company. However, in the world of AI right now, things are moving so fast that the markets are reacting and asking questions later. We are watching these developments closely to ensure your portfolio is positioned for where things are going, not where they've been.
Matt Goldstein
Chief Investment Officer · Exit Wealth®
All opinions expressed in this newsletter is for general informational purposes and constitutes the judgment of the author(s) as the date of the newsletter. The opinions and views expressed by the author are personal and based on economic or market conditions at the time of publication. Actual economic or market events may turn out differently than anticipated. Nothing in this material is intended to serve as personalized investment, tax, or insurance advice. These opinions are subject to change without notice and are not intended to provided specific advice or recommendations for any individual.
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