Wall Street Alarmed: Is GPT-5 the End of Traditional Software?
The recent advent of OpenAI’s GPT-5 has sent ripples of apprehension through the tech and finance industries, prompting a fundamental re-evaluation of the traditional software landscape. Since Microsoft’s founding in 1975 ushered in the modern software era, the industry has steadily grown, but now, the rapid advancements in artificial intelligence, particularly in its ability to generate code, are sparking fears that sophisticated AI models could render conventional software purchases obsolete.
Wall Street analysts are taking these concerns with considerable gravity. D.A. Davidson’s Gil Luria, for instance, openly questioned whether GPT-5’s release marked the twilight of software as we know it, noting a “curious” sharp decline in the stock prices of prominent software companies like Snowflake and Datadog immediately following the model’s debut. The underlying logic, from this perspective, is straightforward: software derives its value from minimizing the need for human labor. If AI can autonomously perform complex tasks, including coding, it inherently diminishes the value proposition of traditional software solutions.
Echoing these anxieties, top executives from major tech firms have weighed in. Mark Zuckerberg, CEO of Meta, has publicly predicted that by 2025, AI agents could possess coding and problem-solving capabilities rivaling those of mid-level engineers. Even more tellingly, Broadcom CEO Hock Tan reportedly halted the acquisition of new software firms, citing concerns over the long-term devaluation of such assets due to AI. Tan’s perspective carries significant weight, given Broadcom’s role in manufacturing custom chips for Google’s AI operations, affording him unique insight into the industry’s trajectory.
However, not everyone is succumbing to a doomsday narrative. Initial expert testing of GPT-5 suggests it is far from infallible, with some even reporting inconsistent performance in certain areas. Nevertheless, the model did demonstrate notable progress in analyzing complex code repositories, indicating a strong potential for future improvement and a capacity to understand vast existing software systems.
Leaders within the software industry are not passively awaiting this transformation; many are proactively embracing it. Spenser Skates, CEO of Amplitude, contends that AI will ultimately reward companies that adeptly integrate it into their services rather than those hoping to be replaced. Skates emphasizes the enduring need for human direction, asserting, “There will be a need for software. Someone still needs to tell the AI what to do.” This perspective suggests that AI may first displace those who fail to adapt, rather than wholesale replacing the entire industry.
The conversation around AI’s impact on software is dynamic and multifaceted. In the short term, AI software is likely to act as a powerful augmentation, enhancing existing business and productivity tools. Looking to the mid-term, organizations that strategically embrace AI are poised to gain a competitive edge and thrive. Ultimately, the long-term outlook points not to the eradication of software, but to its permanent and profound transformation. While the complete automation of software development by AI like GPT-5 doesn’t appear imminent, the industry is undeniably being propelled toward unprecedented change, necessitating a strategic reorientation for businesses across the tech landscape.