Software Sector Faces AI Disruption
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Should l Buy FIG?
Source: CNBC
- Market Performance Decline: Box's stock has dropped 17% in 2026, reflecting investor concerns about the future of software companies amid the rise of AI, leading to significant market value erosion and impacting company confidence.
- Intensifying Industry Competition: With the launch of new tools like Anthropic's Claude Cowork, software companies face direct competition from AI technologies, and despite efforts from Salesforce and ServiceNow to maintain market share, their valuations have fallen by about 25%, indicating weakened market confidence in traditional software.
- Shift in Investor Sentiment: While some analysts believe companies like HubSpot remain robust, the overall market sentiment towards the software sector has turned pessimistic, resulting in significant stock price declines for many firms, reflecting fears of AI replacing traditional software solutions.
- Pressure to Adapt Technologically: Box CEO Levie emphasizes that software companies must rapidly embrace AI to remain competitive, and this pressure is driving innovation in products and services to meet growing customer demands, potentially reshaping the industry landscape in the long term.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy FIG?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on FIG
Wall Street analysts forecast FIG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for FIG is 53.13 USD with a low forecast of 38.00 USD and a high forecast of 70.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
9 Analyst Rating
3 Buy
6 Hold
0 Sell
Moderate Buy
Current: 22.200
Low
38.00
Averages
53.13
High
70.00
Current: 22.200
Low
38.00
Averages
53.13
High
70.00
About FIG
Figma, Inc. designs and develops platforms for people who build digital products together. The Company helps cross-functional teams align and build software more efficiently and ensure the advanced access and controls that large organizations require. Its products include Figma Design, Dev Mode, Figma Sites, Figma Make, Figma Draw, Figma Buzz, FigJam and Figma Slides. Figma Sites is a product that lets clients design a Website and directly publish it to the Web, with a custom URL. Figma Make is an AI-powered tool that turns a prompt into a fully functional prototype. Figma Buzz is a product for easily creating marketing assets (like social media assets and digital ads) at a scale that is consistent with brand or visual identity. Figma Draw provides a space for finer vector editing required when drawing detailed iconography and product illustrations. Figma Design combines powerful features with a collaborative workspace to help teams design and build better products together.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Figma Stock Down 25% but Long-Term Outlook Remains Positive
- Post-IPO Performance: Figma's stock has declined over 25% from its IPO price of $33 to $22.20, reflecting investor concerns about its financial health despite the potential for long-term investors to overlook short-term fluctuations.
- Financial Condition Analysis: In the first nine months of 2025, Figma reported $752 million in revenue, a 41% increase year-over-year, but operating expenses exceeded revenue, resulting in a net loss of over $1 billion, highlighting challenges in profitability.
- Untapped Market Potential: Figma estimates its addressable market at $33 billion, with projected revenue of $1.05 billion for 2025, indicating that the company has barely tapped into its growth potential, while its forward P/S ratio of 9 suggests a reasonable stock price.
- Strong Cash Flow Position: Despite net losses being a concern, Figma generated $204 million in free cash flow in the first nine months of 2025, indicating sufficient cash to sustain operations and alleviating worries about its financial health.
See More
Analysis of Figma's 83% Stock Plunge
- Stock Plunge Reasons: Figma's stock has plummeted 83% in just six months, dropping from $142.92 on August 1 to around $24, indicating severe market concerns about its growth prospects, despite reporting $274 million in revenue for the last quarter, a 38% year-over-year increase.
- Market Overreaction: While the market appears pessimistic about Figma's future, the company has posted operating profits in two of the last three quarters, suggesting that its business is not as dire as perceived, and it is continuing to grow steadily.
- AI Impact Analysis: The rise of artificial intelligence and chatbots poses a risk to the demand for Figma's design software, leading investors to worry that its growth opportunities may diminish, even though the software also aids users in building applications.
- Investment Opportunity Assessment: Despite the current low stock price, Figma's guidance for a 35% growth rate in the fourth quarter indicates ongoing growth potential, making it a potentially undervalued investment opportunity amid market panic.
See More
Figma Employees' Wealth Vanishes as Lock-Up Period Ends
- Lock-Up Expiration: The 180-day lock-up period for Figma ended on January 27, allowing employees to sell shares, but the stock price had plummeted to $22.51, an 80.51% drop from its peak, significantly eroding employee wealth.
- IPO Performance Review: Figma's IPO in July 2025 saw shares surge 250% on the first day to $143.45, but the subsequent six months have seen a relentless decline, indicating a market reassessment of its valuation.
- Analyst Downgrade: Piper Sandler analyst cut Figma's price target from $70 to $35, citing “heavy selling pressure” in the software sector, which has heightened concerns about Figma's competitive position.
- Bleak Market Outlook: Despite reporting a 38% year-over-year revenue growth in its latest filing, the market's reassessment of SaaS valuations poses significant challenges for Figma, with insider selling expected to further pressure the stock price.
See More
Software Stocks Plummet Amid AI Disruption Fears
- Software Stock Decline: Software-related stocks have dropped 21% this year due to investor fears of AI disruption, with most losses occurring in the past week, indicating heightened market anxiety over AI tools like Anthropic's Claude Cowork.
- Microsoft Financial Pressure: Despite a 39% growth in its Azure cloud infrastructure business last quarter, Microsoft shares have fallen 25% in three months due to surging capital expenditures, reflecting increasing investor concerns about its AI strategy.
- Shopify Market Dominance: Shopify dominates the e-commerce software sector, and although its stock is down 38% from its peak, its latest quarter saw a 32% revenue increase to $2.8 billion, demonstrating strong market demand and future growth potential.
- Figma Competitive Edge: Figma's stock has plummeted 85% since its IPO, yet its design software remains competitive, and its ongoing AI integration enhances product capabilities, suggesting continued demand in the design sector.
See More
WisdomTree Cloud Fund Plummets 20% in 2026 Amid AI Concerns
- Cloud Fund Decline: The WisdomTree Cloud Computing Fund has dropped approximately 20% in 2026, including a 6.5% decline this week, reflecting investor concerns over potential disruptions from AI technology, which has negatively impacted confidence across the sector.
- Box's Poor Performance: Box's stock has fallen 17% in 2026, experiencing its steepest monthly drop since 2023, and while CEO Aaron Levie describes this as the most exciting moment in the company's 20-year history, the market remains pessimistic about its future prospects.
- Increased Competition: The launch of new legal and marketing features for Anthropic's Claude Cowork productivity tool has made investors more cautious, fearing that AI could replace traditional software solutions, leading to significant stock declines for companies like HubSpot and Figma, which fell 39% and 40%, respectively.
- Divergent Market Reactions: Despite escalating fears of AI-related disruption, analysts highlight that many software companies maintain solid fundamentals, with HubSpot showing strong business performance and Monday.com being viewed as a profitable grower benefiting from digital and AI collaboration trends, indicating a divergence in market reactions.
See More
Software Sector Faces AI Disruption
- Market Performance Decline: Box's stock has dropped 17% in 2026, reflecting investor concerns about the future of software companies amid the rise of AI, leading to significant market value erosion and impacting company confidence.
- Intensifying Industry Competition: With the launch of new tools like Anthropic's Claude Cowork, software companies face direct competition from AI technologies, and despite efforts from Salesforce and ServiceNow to maintain market share, their valuations have fallen by about 25%, indicating weakened market confidence in traditional software.
- Shift in Investor Sentiment: While some analysts believe companies like HubSpot remain robust, the overall market sentiment towards the software sector has turned pessimistic, resulting in significant stock price declines for many firms, reflecting fears of AI replacing traditional software solutions.
- Pressure to Adapt Technologically: Box CEO Levie emphasizes that software companies must rapidly embrace AI to remain competitive, and this pressure is driving innovation in products and services to meet growing customer demands, potentially reshaping the industry landscape in the long term.
See More
Figma Stock Down 25% but Long-Term Outlook Remains Positive
- Post-IPO Performance: Figma's stock has declined over 25% from its IPO price of $33 to $22.20, reflecting investor concerns about its financial health despite the potential for long-term investors to overlook short-term fluctuations.
- Financial Condition Analysis: In the first nine months of 2025, Figma reported $752 million in revenue, a 41% increase year-over-year, but operating expenses exceeded revenue, resulting in a net loss of over $1 billion, highlighting challenges in profitability.
- Untapped Market Potential: Figma estimates its addressable market at $33 billion, with projected revenue of $1.05 billion for 2025, indicating that the company has barely tapped into its growth potential, while its forward P/S ratio of 9 suggests a reasonable stock price.
- Strong Cash Flow Position: Despite net losses being a concern, Figma generated $204 million in free cash flow in the first nine months of 2025, indicating sufficient cash to sustain operations and alleviating worries about its financial health.
See More
Analysis of Figma's 83% Stock Plunge
- Stock Plunge Reasons: Figma's stock has plummeted 83% in just six months, dropping from $142.92 on August 1 to around $24, indicating severe market concerns about its growth prospects, despite reporting $274 million in revenue for the last quarter, a 38% year-over-year increase.
- Market Overreaction: While the market appears pessimistic about Figma's future, the company has posted operating profits in two of the last three quarters, suggesting that its business is not as dire as perceived, and it is continuing to grow steadily.
- AI Impact Analysis: The rise of artificial intelligence and chatbots poses a risk to the demand for Figma's design software, leading investors to worry that its growth opportunities may diminish, even though the software also aids users in building applications.
- Investment Opportunity Assessment: Despite the current low stock price, Figma's guidance for a 35% growth rate in the fourth quarter indicates ongoing growth potential, making it a potentially undervalued investment opportunity amid market panic.
See More
Figma Employees' Wealth Vanishes as Lock-Up Period Ends
- Lock-Up Expiration: The 180-day lock-up period for Figma ended on January 27, allowing employees to sell shares, but the stock price had plummeted to $22.51, an 80.51% drop from its peak, significantly eroding employee wealth.
- IPO Performance Review: Figma's IPO in July 2025 saw shares surge 250% on the first day to $143.45, but the subsequent six months have seen a relentless decline, indicating a market reassessment of its valuation.
- Analyst Downgrade: Piper Sandler analyst cut Figma's price target from $70 to $35, citing “heavy selling pressure” in the software sector, which has heightened concerns about Figma's competitive position.
- Bleak Market Outlook: Despite reporting a 38% year-over-year revenue growth in its latest filing, the market's reassessment of SaaS valuations poses significant challenges for Figma, with insider selling expected to further pressure the stock price.
See More
Software Stocks Plummet Amid AI Disruption Fears
- Software Stock Decline: Software-related stocks have dropped 21% this year due to investor fears of AI disruption, with most losses occurring in the past week, indicating heightened market anxiety over AI tools like Anthropic's Claude Cowork.
- Microsoft Financial Pressure: Despite a 39% growth in its Azure cloud infrastructure business last quarter, Microsoft shares have fallen 25% in three months due to surging capital expenditures, reflecting increasing investor concerns about its AI strategy.
- Shopify Market Dominance: Shopify dominates the e-commerce software sector, and although its stock is down 38% from its peak, its latest quarter saw a 32% revenue increase to $2.8 billion, demonstrating strong market demand and future growth potential.
- Figma Competitive Edge: Figma's stock has plummeted 85% since its IPO, yet its design software remains competitive, and its ongoing AI integration enhances product capabilities, suggesting continued demand in the design sector.
See More
WisdomTree Cloud Fund Plummets 20% in 2026 Amid AI Concerns
- Cloud Fund Decline: The WisdomTree Cloud Computing Fund has dropped approximately 20% in 2026, including a 6.5% decline this week, reflecting investor concerns over potential disruptions from AI technology, which has negatively impacted confidence across the sector.
- Box's Poor Performance: Box's stock has fallen 17% in 2026, experiencing its steepest monthly drop since 2023, and while CEO Aaron Levie describes this as the most exciting moment in the company's 20-year history, the market remains pessimistic about its future prospects.
- Increased Competition: The launch of new legal and marketing features for Anthropic's Claude Cowork productivity tool has made investors more cautious, fearing that AI could replace traditional software solutions, leading to significant stock declines for companies like HubSpot and Figma, which fell 39% and 40%, respectively.
- Divergent Market Reactions: Despite escalating fears of AI-related disruption, analysts highlight that many software companies maintain solid fundamentals, with HubSpot showing strong business performance and Monday.com being viewed as a profitable grower benefiting from digital and AI collaboration trends, indicating a divergence in market reactions.
See More
Software Sector Faces AI Disruption
- Market Performance Decline: Box's stock has dropped 17% in 2026, reflecting investor concerns about the future of software companies amid the rise of AI, leading to significant market value erosion and impacting company confidence.
- Intensifying Industry Competition: With the launch of new tools like Anthropic's Claude Cowork, software companies face direct competition from AI technologies, and despite efforts from Salesforce and ServiceNow to maintain market share, their valuations have fallen by about 25%, indicating weakened market confidence in traditional software.
- Shift in Investor Sentiment: While some analysts believe companies like HubSpot remain robust, the overall market sentiment towards the software sector has turned pessimistic, resulting in significant stock price declines for many firms, reflecting fears of AI replacing traditional software solutions.
- Pressure to Adapt Technologically: Box CEO Levie emphasizes that software companies must rapidly embrace AI to remain competitive, and this pressure is driving innovation in products and services to meet growing customer demands, potentially reshaping the industry landscape in the long term.
See More
