In 1993, IBM stock fell from $43 to $13.
Bill Gates said publicly he expected IBM to fold within seven years.
The prevailing wisdom across Wall Street was that the PC revolution had made IBM obsolete... and that no large, bureaucratic technology company could survive in a world built for smaller, faster competitors.
Why?
Because the market has a habit of swinging from up-only-from-here back to everything-to-zero… without room for any arguments in between.
We're watching the same movie play out in software right now.
Because now that AI can now write code… a solo founder with a laptop and Claude Code subscription can spin up a working product in a weekend.
Therefore, every software business that took 10 years and hundreds of millions to build… is now worthless. So panic accordingly.
The thing is... the market is lumping together businesses that have almost nothing in common.
There's a meaningful difference between software you use to manage your team's holiday bookings and software that sits at the centre of a hospital's payment infrastructure.
One of those can be replaced on a Tuesday afternoon. The other one cannot be replaced without regulatory approval… a 24-month integration process… and a sign-off from people who would rather lose their job slowly than quickly.
Vibe coding (AI-assisted development where you describe what you want in plain English and a working prototype appears) gets you… at best… 80 to 90% of the way there.
But it’s that last 10% is where enterprise software actually lives.
All the boring stuff you don’t see as the end user… but rely upon when shit hits the fan.
Things like role-based access controls… audit trails… SOC2 compliance… HIPAA… GDPR.
The kind of governance infrastructure that a financial institution buys alongside the software itself.
You can prompt your way to something that LOOKS like a Moody's credit dashboard overnight. What you cannot prompt into existence is 80 years of regulatory standing and the legal accountability that a bank's risk committee actually relies on.
The software is almost an afterthought because the institution is the product.
This is what the broad selloff is missing.
Customers in high-stakes sectors pay premium prices specifically because switching carries consequences they can't absorb.
Cybersecurity… payments… healthcare records… financial infrastructure - when these go down, the business stops.
The CFO or CTO is not thinking "can I get something cheaper?"
They’re thinking "can I afford to be wrong?"
The answer in most cases, is no!
And that's why incumbents in these categories have moats that a faster prototyping tool doesn't erode.
I'm not saying AI doesn't change anything because it does. It’s clear that the barrier to experimenting with new software has collapsed… and certain categories of business… the kind built around friction and switching costs that were always artificial… are under genuine pressure.
Meaning that the businesses worth holding are the ones where the software is almost secondary to the trust and institutional relationships wrapped around it. AI is a sketchpad, not a replacement for that.
As for IBM… the stock is up 25x since Gates’ prediction. The company survived not because it outcompeted Microsoft… but because its enterprise relationships and institutional trust were impossible to replicate overnight.
So as always, the market's job in the short run is to create opportunities for people patient enough to wait for the long run.
Oliver