What Happened?
A number of stocks fell in the afternoon session after the "AI replacement" narrative reached a fever pitch following the release of new models from Anthropic and OpenAI.
The simultaneous debut of Anthropic's Claude Opus 4.6 and OpenAI's "Frontier" agent platform raised concerns that autonomous agents are no longer just tools, but new operating systems that can cannibalize traditional software. This suggests that specialized applications might be reduced to mere features within frontier models, rendering legacy seat-based licensing models increasingly obsolete.
The catalyst is the models' unprecedented agentic power. Opus 4.6’s "software hunting" capability allows it to autonomously audit and patch complex codebases, while OpenAI's Frontier platform bypasses traditional CRM and ticketing interfaces to perform enterprise work directly. By commoditizing sophisticated workflows into low-cost API calls, these releases threaten the recurring revenue of software giants. As AI builds bespoke tools on demand, the market is aggressively repricing the entire software application layer.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Advertising Software company Zeta Global (NYSE: ZETA) fell 6.8%. Is now the time to buy Zeta Global? Access our full analysis report here, it’s free.
- Sales Software company HubSpot (NYSE: HUBS) fell 7.2%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free.
- Design Software company Unity (NYSE: U) fell 6%. Is now the time to buy Unity? Access our full analysis report here, it’s free.
- Data Analytics company Domo (NASDAQ: DOMO) fell 10.8%. Is now the time to buy Domo? Access our full analysis report here, it’s free.
- Lending Software company Upstart (NASDAQ: UPST) fell 7.8%. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
Zooming In On Domo (DOMO)
Domo’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. But moves this big are rare even for Domo and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 6.4% on the news that a broad sell-off swept through the software sector, driven by growing concerns about the impact of artificial intelligence. This led to institutional repositioning as traders pivot away from traditional SaaS providers in favor of companies with more defensible, AI-integrated moats. The tech-heavy Nasdaq Composite index declined by 0.8%, while the broader S&P 500 also slipped.
Domo is down 45.1% since the beginning of the year, and at $4.56 per share, it is trading 75% below its 52-week high of $18.20 from September 2025. Investors who bought $1,000 worth of Domo’s shares 5 years ago would now be looking at an investment worth $60.89.
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