Huang Renxun criticizes the SaaS software plunge as "unreasonable": AI needs tools, it won't reinvent the wheel

NVIDIA CEO Jensen Huang strongly refuted market fears that AI will replace the software industry at the Cisco AI Summit, stating that the sell-off of software stocks “is the most illogical thing in the world,” and using a screwdriver analogy to emphasize that AI will use existing tools rather than rebuild everything.
(Background: Ray Dalio of Bridgewater: It’s still too early to sell AI stocks! Because the “needle piercing the bubble” hasn’t appeared yet.)
(Additional context: NVIDIA dominates the AI race! Jensen Huang heavily invests in AI to build a trillion-dollar GPU empire.)

Table of Contents

• Screwdriver Analogy: AI Uses Tools, Doesn’t Invent Them
• Anthropic Plugins Trigger $285 Billion Sell-off
• NVIDIA Insider Experience: AI Tools Liberate Employees, Not Replace Them

Recently, global software stocks have faced heavy selling due to concerns over AI disruption, but NVIDIA’s CEO Jensen Huang directly addressed this panic at the Cisco AI Summit in San Francisco on Tuesday, calling it “completely unreasonable.”

Screwdriver Analogy: AI Uses Tools, Doesn’t Invent Them

Huang Huang clearly stated at the summit that software products are fundamentally tools, and AI will use these tools rather than reinvent them from scratch. He used a vivid analogy to ask:

This is the most illogical thing in the world. Some believe tools are declining and will be replaced by artificial intelligence. Would you use a screwdriver, or invent a new one?

Huang further pointed out that the widespread concern that AI will diminish the importance of software companies is a fundamental misunderstanding. AI will still heavily rely on the existing software ecosystem rather than rebuilding foundational tools from the ground up. He even named companies like ServiceNow, SAP, Cadence, and Synopsys, suggesting these software firms are well-positioned.

Anthropic Plugins Trigger $285 Billion Sell-off

The trigger for this wave of software stock crashes was Anthropic’s release on January 30 of 11 open-source plugins for its AI assistant Claude Cowork, including a legal plugin capable of automating contract review, confidentiality agreement classification, compliance processes, and legal briefings. This sparked deep market fears that AI automation would undermine SaaS subscription business models.

According to Goldman Sachs’ tracking of the US software stock basket index, it plummeted 6% in a single day, the largest drop since the tariff panic in April last year; the financial services sector index also fell nearly 7%. Thomson Reuters alone dropped about 17-18%, RELX and Wolters Kluwer fell 14% and 13%, respectively. Overall, this sell-off wiped out approximately $285 billion in market value.

NVIDIA Insider Experience: AI Tools Liberate Employees, Not Replace Them

Huang Huang cited his own company as evidence. He revealed that NVIDIA has widely adopted various AI tools, including Cursor, and the actual effect is not layoffs but freeing up more time for employees, allowing teams to focus more on the company’s core strengths—semiconductor and computing system design.

Notably, this sell-off has spread to Asian markets, with India’s IT export leader Infosys plunging 7.3%, and software stocks down about 20% since the start of the year. However, from another perspective, Ray Dalio, founder of Bridgewater, previously said that it is still too early to sell AI stocks because the “needle piercing the bubble” has not yet appeared. From Huang Huang’s point of view, the market’s panic over AI replacing the software industry may be a typical manifestation of this irrational sentiment.