RELX said artificial intelligence would drive its growth for “many years to come” after the FTSE-listed information and analytics group posted a 9% rise in 2025 operating profit on Thursday.
It was not enough to quell investors’ fears: RELX’s shares are down roughly 33% over the past month, as the company is caught in a broader sell-off across technology stocks.
Big tech stocks fell sharply across the latter half of the week, following fears of AI disruption.
Software-as-a-service (SaaS) companies were at the epicentre of the sell-off. The S&P North American Technology Software index dipped below 20x forward earnings last week for the first time on record, meaning investors are no longer willing to pay premium prices for the sector. Analysts at Jefferies screened 64 software stocks and found that “42% are trading at, or close to, their historical low valuation”. In the UK, shares in Sage Group, which provides accounting and business software, have fallen around 27% over the past month, while shares in Softcat, Kainos Group and Bytes Technology also slid over the week.
The so-called “SaaS-pocalypse” is driven by concern that agentic AI will bypass or replicate software products, and ultimately prove existential for companies who are unable to adapt.
Software was once eating the world, or so the tech investor Marc Andreessen declared in 2011. These businesses typically grew faster than the global economy, powered by steady subscription revenues, high margins and the promise of productivity gains. Even in economic downturns, customers rarely cancelled their subscriptions because human labour was more expensive.
Now, it seems, AI is eating software. Thanks to rapid advancements, AI chatbots can write code at a level close to that of experienced engineers. Last month, Boris Cherny, who runs Claude Code at the AI lab Anthropic, said he had not written any code in more than two months. In early February, Anthropic said the legal version of its Claude chatbot could automate a raft of tasks, from analysing case law to drafting arguments, triggering the latest software sell-off.
Anthropic is not the only would-be disruptor: the startups Databricks, Cognition and OpenAI are all pushing “agentic” products. What some analysts are referring to as AI “landmines” are found across the market. This week a rout in logistics stocks was caused after a former karaoke company said a new AI tool was helping customers scale freight volumes by 300% to 400% without a corresponding increase in headcount.
Even though AI agents still make mistakes, the rapid technological advancements – and the scale of the spending – has unsettled software investors. Anthropic, meanwhile, raised $30bn in a Series G round at a $380bn valuation this week, more than doubling its previous valuation.
Bain & Co analysts found software firms are still holding on to over 90% of their existing clients year-on-year. But growth is slowing. David Lipman, an analyst at the consultancy, says existing customers are pausing software spend while executives “figure out AI”.
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Author and AI expert Azeem Azhar says that during the last automation wave 10-15 years ago, companies survived by adopting emerging capabilities, such as “robo-advisers” in the wealth management sector. Many, including Charles Schwab, traded off only a small amount of market share and margin in the process. But, Azhar says, the speed of AI improvement and the abundance of capital for private challengers has shrunk the window of opportunity for companies to respond effectively.
Software companies will need to adopt AI or risk being left behind. While sectors such as customer contact centres face a genuine displacement risk, Lipman says the market has overcorrected, dumping even “rock-solid software businesses” that are already incorporating AI. Most corporate buyers, he says, would rather get AI features from vendors they already trust. Yet incumbents are being “punished” because they have yet to prove that AI will generate meaningful revenue and profit.
From 2020 through the first half of 2025, about one-in-five North American buyouts were tech deals, says Bain & Co. Now the public-market wobble is spreading to listed alternative asset managers, the firms that run private equity funds. Investors are selling shares because they worry the underlying value of their private software portfolios is deteriorating. Lipman says PE funds should seize the opportunity to help companies adapt to a new age of AI.
As for RELX, it still sees AI as an opportunity. “In the short run, [share prices are] all about sentiment and trading flows,” says chief financial officer Nick Luff. “But in the long run, it's about company performance, and that's what we're focused on.”
Photograph by Michael Nagle/Bloomberg via Getty Images