What Happened?

A number of stocks fell in the afternoon session after the "AI replacement" narrative reached a fever pitch following the release of new models from Anthropic and OpenAI. 

The simultaneous debut of Anthropic's Claude Opus 4.6 and OpenAI's "Frontier" agent platform raised concerns that autonomous agents are no longer just tools, but new operating systems that can cannibalize traditional software. This suggests that specialized applications might be reduced to mere features within frontier models, rendering legacy seat-based licensing models increasingly obsolete. 

The catalyst is the models' unprecedented agentic power. Opus 4.6’s "software hunting" capability allows it to autonomously audit and patch complex codebases, while OpenAI's Frontier platform bypasses traditional CRM and ticketing interfaces to perform enterprise work directly. By commoditizing sophisticated workflows into low-cost API calls, these releases threaten the recurring revenue of software giants. As AI builds bespoke tools on demand, the market is aggressively repricing the entire software application layer.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Advertising Software company DoubleVerify (NYSE: DV) fell 3.2%. Is now the time to buy DoubleVerify? Access our full analysis report here, it’s free.
• Data Infrastructure company Elastic (NYSE: ESTC) fell 4.5%. Is now the time to buy Elastic? Access our full analysis report here, it’s free.
• Banking Software company nCino (NASDAQ: NCNO) fell 4.3%. Is now the time to buy nCino? Access our full analysis report here, it’s free.
• Project Management Software company Atlassian (NASDAQ: TEAM) fell 4.3%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
• Banking Software company Q2 Holdings (NYSE: QTWO) fell 3.5%. Is now the time to buy Q2 Holdings? Access our full analysis report here, it’s free.

Zooming In On Elastic (ESTC)

Elastic’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock dropped 8% on the news that a broad sell-off swept through the software sector, driven by growing concerns about the impact of artificial intelligence. 

This led to institutional repositioning as traders pivot away from traditional SaaS providers in favor of companies with more defensible, AI-integrated moats. The tech-heavy Nasdaq Composite index declined by 0.8%, while the broader S&P 500 also slipped.

Elastic is down 21.2% since the beginning of the year, and at $57.17 per share, it is trading 51.5% below its 52-week high of $117.76 from February 2025. Investors who bought $1,000 worth of Elastic’s shares 5 years ago would now be looking at an investment worth $342.65.

While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report, it’s free.