Investment giant Bridgewater Associates is sounding the alarm about artificial intelligence potentially wiping out established software companies, drawing comparisons to how online retail giant Amazon transformed the book industry in the 1990s.
The firm’s top investment leaders issued a warning Monday that traditional software businesses face the same kind of survival threat that brick-and-mortar bookstores like Barnes & Noble encountered when Amazon launched its online book sales.
“With the latest release of Claude Code, an upstart competitor has created existential risk for major businesses, much as Amazon posed to Barnes & Noble,” the client note said on Monday.
These concerns about new AI technology disrupting established software firms have already shaken investor confidence, leading to significant stock market losses. Software company shares have dropped dramatically, with the S&P 500 Software and Services Index falling 16.6% since the beginning of the year.
The AI revolution has also triggered widespread job cuts across multiple industries, as companies from technology giants to financial services firms eliminate thousands of positions while citing cost reductions from implementing artificial intelligence systems.
“Markets have started pricing in the risk to application software companies, and companies will either co-evolve with AI or face disruption,” the investment firm’s co-CIOs Bob Prince, Greg Jensen and Karen Karniol-Tambour wrote.
The investment managers noted that during the 1990s bookstore upheaval, while some physical retailers closed their doors, many successfully transformed by building online platforms and enhancing their in-store customer experiences with specialized book selections.
Beyond the technology sector concerns, Bridgewater also cautioned that ongoing international conflicts will continue creating market instability and commodity disruptions.
The firm’s leadership pointed to U.S. actions regarding Venezuela, Greenland and Iran as potentially weakening international partnerships and accelerating global competition for military resources and raw materials.
Maritime traffic through the Strait of Hormuz, which handles approximately 20% of worldwide energy shipments, remains significantly reduced as diplomatic efforts with Iran have stalled.
These international tensions have created widespread market volatility, caused shortages of essential commodities, and raised concerns about increasing inflation rates.
“How the war in Iran plays out from here remains highly uncertain, but enough disruption has occurred, and the process of resuming shipments will be slow enough, that the commodity shock will persist for some time,” the note said.
