☁️ Claude cover

The relentless slide in software stocks last week continued through Friday, with the iShares Expanded Tech Software ETF (or IGV) trading to the downside and down nearly 6% over the course of the week.

• The growing adoption of Claude Code, and more recently, the launch of Claude Cowork by Anthropic, has been an attention-grabbing moment as to the power of AI agents and how they can be housed and operated solely under one highly integrated user interface.

• To say that software stocks have fallen out of favor would be an understatement, as having this much industry-specific market pain is incredibly rare.

• Based on data going back to 2001, if IGV has fallen at least 5% over the past month, the SPDR S&P 500 ETF is typically also down between 5% to 6% over the same period.

• Less than 3% of the time does SPY rise at least 1% while software stocks have gotten slammed — 28 instances in total, going back to August 2001 — and three of those are the past three sessions. 

• A smattering of once high-flying, expensive software stocks, including Salesforce, Adobe, and Atlassian, have all seen their enterprise value compress to below 5x their estimated sales (from as high as 40x in 2021).

• AI agents are able to develop software and handle the tasks and processes that served as the core value proposition of these companies. 

Doug O’Laughlin, president of SemiAnalysis, authored a thought-provoking piece in which he argued that “Claude Code is the ChatGPT moment repeated.”

The Takeaway

It’s a fire alarm moment for software, which risks being perceived as the horse-drawn carriage manufacturer the moment that engineers first seized the power of steam. 

“What I’m trying to say is that the traditional differentiation metrics will change,” O’Laughlin wrote. “Faster workflows, better UIs, and smoother integrations will all become worthless, while persistent information, a la an API, will become extremely valuable.”

As the marginal corporate dollar goes directly to AI rather than software or labor, it makes sense that investors’ dollars appear to be doing the same thing.

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Stories we’re watching

• Silver is the new gold, but… On one baubled hand, silver is holding on to its gold medal, at least with retail traders, who have made the iShares Silver Trust the top trending ticker in the r/WallStreetBets subreddit over each of the past 12 hours, 1 day, and 1 week. On the other hand, strategists warn the shine is off: key parts of the fundamental and technical theses for silver are starting to look less solid, so it may be time for bearish puts against the precious metal.

• Can Sandisk stack back-to-back titles? Though we’re only two weeks into the year, Sandisk is making a strong early case for its name to be added to the annals of stock market lore. After topping the S&P 500 Index with a whopping 559% total return in 2025, the stock is once again beating out around 500 of America’s largest companies this year, too — as Chartr shows here.

Google has a leg up over Apple in the race to roll out personalized AI

Last week, Apple and Google made dueling announcements that offer a glimpse of what the next phase of consumer AI may look like — and which company might be better positioned to dominate it. Here’s how each one’s position in AI, phones, and services stack up.

Google vs. Apple

• 🇬🇧 Grok: After a scare in which the chances of the UK banning Grok got as high as 51%, it appears that xAI’s efforts to rein in its image-generating AI have cooled tempers, as the market* is pricing in just a 21% chance of the UK banning Grok before March. 

• 🏛️ Fed: Kevin Hassett’s chances of being Trump’s nominee to serve as Fed chair have plummeted after the president appeared to walk back his enthusiasm for putting his top economic adviser in charge at the Fed, with the market increasingly expecting Kevin Warsh to get the gig in a decision before the end of the month. 

• 🤖 Sam vs. Elon: Sam Altman is warning investors that Elon Musk might resort to making “outlandish claims” ahead of the two AI barons meeting in court. The market thinks Musk has the edge here, at least in the US District Court for Northern California, pricing in a 66% chance of Musk prevailing. 

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

• Opponents of the Netflix-Warner Bros. Discovery deal are taking the fight to Europe

• The EPA ruled that xAI’s Colossus data center illegally used gas turbines without permits

• A report found the average tip for delivery workers is below a dollar — that’s lower than when we looked into it just last December