The market sell-off in cybersecurity stocks like CrowdStrike and Okta wasn't about Anthropic's new tool's direct features. It reflects a broader, rational repricing of all software valuations as investors grapple with the existential risk that AI could render any business model obsolete with terrifying speed.

The "SaaSpocalypse" is evolving. Initially focused on speculative threats, the danger is now concrete. As seen with startup Altruist impacting Charles Schwab's stock, rising companies are winning business from incumbents *today* by shipping superior AI features, causing immediate financial consequences.

The recent software stock drawdown is not about poor current performance; many companies are still beating earnings. Instead, the market is pricing in a massive "terminal value risk" from AI, valuing companies as if they will decline in perpetuity, creating a historic disconnect between current fundamentals and long-term valuation.

The downturn in software stocks isn't tied to current earnings. Instead, investors are repricing the entire sector, removing the premium they once paid for its perceived safety and stable, long-term contracts, which are now threatened by AI disruption.

Initially viewed as a growth driver, Generative AI is now seen by investors as a major disruption risk. This sentiment shift is driven by the visible, massive investments in AI infrastructure without corresponding revenue growth appearing in established enterprise sectors, causing a focus on potential downside instead of upside.

The $830 billion sell-off in software stocks wasn't a reaction to AI's current capabilities, but to a shift in investor perception. New AI agents made a future "software apocalypse" plausible enough to alter present-day company valuations.

The recent software stock wipeout wasn't driven by bubble fears, but by a growing conviction that AI can disintermediate traditional SaaS products. A single Anthropic legal plugin triggered a massive sell-off, showing tangible AI applications are now seen as direct threats to established companies, not just hype.

Investor uncertainty about the long-term viability of software business models due to AI is causing a fundamental shift in valuation. Instead of paying a premium for future growth, investors are now demanding immediate returns like dividends, effectively treating established software firms as value stocks rather than growth stocks.

For public software companies, merely having to address the threat of AI on an earnings call signals vulnerability to investors. Regardless of the CEO's answer, the stock is likely to sell off because the question itself forces the market to price in the risk of disruption, turning perception into a financial reality.