April 10, 2026 Software stocks dropped sharply Thursday after Anthropic revealed a new AI system with advanced coding and security capabilities. The company said its Claude Mythos model is powerful enough that it is not being released publicly.
The selloff hit some of the largest names in the sector. Shares of Palantir, ServiceNow and Intuit fell between 6 per cent and 8 per cent, while Salesforce dropped 3 per cent, making it the worst-performing stock in the Dow Jones Industrial Average despite broader market gains.
Investor concern centres on the capabilities demonstrated by Anthropic’s Mythos model and its associated AI agents. The company said the system can outperform most human experts at identifying and exploiting software vulnerabilities, describing it as “a step-change” in cybersecurity testing and exploitation.
Anthropic has limited access to roughly 50 organisations, including cybersecurity firms, which are using the model to scan both proprietary and open-source systems. In safety testing, the company said the model showed “a potentially dangerous capability for circumventing our safeguards,” reinforcing its decision to restrict wider release.
The announcement has intensified pressure on the software-as-a-service sector, which has already been under scrutiny this year. Investors are increasingly weighing whether AI agents capable of writing, debugging and securing code could erode the value of traditional software products that rely on recurring subscriptions and high-margin services.
The impact is visible across the sector. The iShares Expanded Tech-Software Sector ETF fell about 4 per cent on the day and is down nearly 28 per cent since the start of the year, marking its lowest level since late 2023. The decline has been described by some investors as part of an ongoing “SaaSpocalypse,” driven by uncertainty over how AI will reshape software economics.
The turnaround in sentiment comes after a brief pause in the downturn, when attention had turned to geopolitical tensions and energy markets. With AI developments back in focus, investors are now looking ahead to upcoming earnings reports for signals on how established companies are adapting both by integrating AI internally and defending against AI-native competitors.
