AI Anxiety Wipes $62 Billion Off Software Fortunes as Investors Rethink the Sector

A wave of anxiety over artificial intelligence is battering the software industry, costing its most prominent leaders a combined $62 billion in lost personal wealth so far this year. According to Bloomberg News, eight of the ten largest individual wealth declines in 2026 have come from billionaires who built their fortunes in software — a stark signal of how dramatically investor sentiment has shifted.

At the center of the downturn are the founders of AppLovin, the mobile advertising and technology platform. The company’s shares have fallen by nearly a third this year, slashing fortunes across its leadership team. Chief executive Adam Foroughi has seen his net worth plunge from more than $27 billion in December to $17.3 billion, while co-founders John Krystynak and Andrew Karam have recorded losses of 29.3% and 23.2%, respectively. Year-to-date, Krystynak is down $2.4 billion, while Karam has lost $2.8 billion.

The pain extends far beyond AppLovin. Oracle founder Larry Ellison has suffered the single largest personal hit, losing nearly $40 billion as software stocks slid sharply, pushing him down to sixth place among the world’s wealthiest individuals. Bloomberg currently values Ellison’s fortune at $207 billion.

Other prominent names are feeling the squeeze. Jim Goodnight, co-founder of SAS Institute, one of the world’s largest privately held software companies, has seen his wealth fall 23.2% since January — a loss of roughly $3.3 billion. Coinbase CEO Brian Armstrong has also been hit hard, with his net worth down 18%, or about $1.8 billion, as both tech and crypto markets retreat.

Behind the selloff is growing concern that artificial intelligence could replace large swaths of traditional software, particularly basic automation tools. Hedge funds have aggressively increased short bets against software companies this year, targeting businesses seen as most vulnerable to AI disruption. According to S3 Partners, short-sellers have already pocketed $24 billion in gains as the sector’s total market value has shrunk by $1 trillion.

Those fears intensified earlier this week when Anthropic unveiled its new Cowork platform, including a plugin designed to automate routine legal work such as contract reviews and risk flagging. The announcement reignited debate over whether general-purpose AI can now perform tasks once handled by humans using software — but at a fraction of the cost.

Markets reacted swiftly. The news sparked a $285 billion selloff across software, financial services, and asset management stocks. LegalZoom shares plunged 20%, while RELX dropped as much as 17% and Wolters Kluwer fell up to 13%. Intuit slid 11%, as investors began eyeing accounting software as the next potential casualty of AI disruption.

Not everyone is convinced the panic is justified. Nvidia CEO Jensen Huang called the selloff “the most illogical thing in the world,” questioning the idea that AI replaces tools rather than enhances them. “Would you use a screwdriver or invent a new screwdriver?” he asked, according to Bloomberg.

Market veterans, however, argue the turmoil runs deeper than AI alone. William Stern, founder of fintech firm Cardiff, says the reckoning reflects a broader shift in financial reality as money becomes more expensive.

“This isn’t just about AI. It’s about gravity,” Stern said. “When money costs 5% or 6%, you can’t value a company on profits that might happen in 2030. That math doesn’t work anymore.”

According to Stern, years of cheap capital inflated software valuations and masked weak fundamentals. “AI is real. But the valuations were fake,” he said. “They were built on the idea that money would be cheap forever. Now that capital is expensive, investors are done with the fairy tales.”

As investors increasingly demand real cash flow today, not distant promises, software stocks are being repriced — and the $62 billion wiped from executive fortunes may only be the beginning.

“You can’t pay a dividend with a language model,” Stern added. “You need profit. That $62 billion drop is just the froth blowing off the top.”