NOW, INTU, ADBE, CRM Stocks Surge As AI Pacing Debate Hammers Chips: Analyst Says Hardware Vs Software Trade ‘Is Turned On Its Head’

Investors reassess AI disruption risks as software finds a fresh catalyst.

• SaaS stocks got a boost Monday as AI labs called for a slower pace of frontier-model development.
• Semiconductor shares tumbled on fears that slower AI progress could weigh on infrastructure spending.
• August’s software rally has faced a volatile September as GPT-6 Astra revived.

Software stocks, led by ServiceNow and Intuit, staged a strong rally on Monday, even as AI-linked sectors such as chips and cloud services were hammered by the fallout from AI firms’ push to pace the development of frontier models.

Software, or software-as-a-service (SaaS), stocks, previously seen as among the most vulnerable to AI disruption, rallied in tandem on hopes of a slower-than-feared AI buildout. 

ServiceNow gained 7.4%, its best move so far in September, while Intuit, Adobe and Salesforce climbed between 5.5% and 4.7%, and iShares Expanded Tech-Software Sector ETF (IGV) gained 5%. They all fell marginally in the overnight session. 

Meanwhile, semiconductor stocks saw some of the sharpest declines as investors fretted that a pullback could hamper a recent surge in infrastructure investment. 

Intel and Micron closed more than 5% lower, while Broadcom and AMD fell 4.8% and 4.4% respectively, with the iShares Semiconductor ETF (SOXX) declining 5.6%.

South Korean memory chip heavyweights SK Hynix and Samsung closed down 4% and 6%, respectively, in Seoul.

AI Firms Call For Pacing Development

The moves come after Anthropic CEO Dario Amodei called on AI labs to slow development, warning that the tech’s growth is rapidly outpacing safety controls. His views were broadly backed by SpaceX’s Elon Musk and OpenAI’s Sam Altman. 

The debate picked up last week after Anthropic researcher Jacob Coxon resigned, warning that the AI race could threaten humanity by decade-end. The concerns follow security breaches in which AI models bypassed developer safeguards. U.S. President Donald Trump has nevertheless urged firms to continue AI development as the status quo, arguing that the U.S. must maintain its lead over China.

SaaS Stocks: What Analysts Are Saying

Monday’s trading “marks a change for markets, with the negative on software, positive on hardware, trade being turned on its head,” said Morningstar strategist Michael Field. 

“On the back of warnings that AI development might need to slow down, which the market is viewing as a negative for hardware firms, as it means the buildout may also slow. For software firms that many feared would be disrupted, this means a stay of execution,” he said.

Noted tech analyst Dan Ives wrote, “If OpenAI and Anthropic slow their model development, the software sector will accelerate its AI development and further narrow the gap against the frontier models. Meta will also go down this path and many others.” 

Bank of America said in a note on Monday that chip investors should tune out the “noise” driving Monday’s rout and focus on the market forces that could push AI capex to triple to $3 trillion by 2030. “Demand signals remain robust: 100% network utilization, rising rental rates even for older-gen chips, and a global AI arms race,” according to its note to clients. “We therefore expect any eventual outcome to resemble industry-led self-regulation,” wrote Arya, “rather than intervention capable of materially slowing deployment or AI capex.”

SaaS Stocks: What Retail Traders Feel

Software stocks had a strong August before giving back some gains in September, as investors initially rotated toward beaten-down SaaS names on signs that AI was not immediately displacing established software businesses.

The iShares Expanded Tech-Software ETF surged more than 16% in August, with ServiceNow jumping about 29% after strong results, while Intuit also posted solid fiscal-year results. 

September has been more volatile, however, with Salesforce, Intuit and ServiceNow falling sharply after OpenAI’s GPT-6 Astra revived fears that AI could disrupt traditional software. 

Cybersecurity names such as CrowdStrike and Palo Alto Networks have bucked the trend, rallying as concerns over AI safety and security boosted demand expectations. 

On Stocktwits, retail sentiment was ‘extremely bullish’ for ADBE, ‘bullish’ for SOXX, ‘neutral’ for NOW, and ‘bearish’ for CRM, INTU and IGV.

“$SPY $IGV $DRAM $SMH Mag7 and software stocks have been showing strength while semis and memory chips got slammed,” said a trader.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<