Software-as-a-Service (SaaS) stocks have faced significant declines, particularly after Anthropic’s launch of its Claude language model, raising concerns about AI disruption in the sector. Major European software firms, including SAP and Dassault Systèmes, saw steep losses this year amid fears of decreased demand for their products. Morningstar’s Chief Europe Market Strategist, Michael Field, noted that recovery for these stocks may take more than 12 months, despite some tentative buying observed recently. The selling pressure is driven by anxiety over AI’s ability to enable companies to create their own software solutions in-house, thus making smaller firms particularly vulnerable. Fields suggests that well-established companies with robust economic moats, like SAP and Amadeus, may weather the storm better. Analysts believe that while the market is discerning between winners and losers, fears of widespread disruption might be exaggerated, positioning certain European firms favorably as recovery continues.
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