Remember when we thought AI would replace human workers? Plot twist: it’s coming for software companies first.
ChatGPT-5 dropped last week and holy moly, this thing is scary good. We’re not talking about your typical “10% better than the last version” upgrade. This is more like watching a high schooler suddenly solve calculus problems while running a marathon.
Here’s the kicker: someone asked ChatGPT-5 to build a language-learning app. In seconds, it spat out something that looked like it could compete with Duolingo. No developers, no months of coding, no venture capital needed. Just “hey AI, make me an app” and boom – done.
When Your Product Becomes Someone Else’s Side Quest
This is where things get spicy for investors. ChatGPT-5 isn’t just getting smarter – it’s becoming the competition. Why pay $1,000+ per month for specialized software when ChatGPT Plus costs $40 and can probably do the same thing?
Small businesses are already doing the math. Need a website? Skip the website builder and just describe your business to AI. Want marketing automation? Upload your data and let ChatGPT handle it. Business intelligence dashboards? ChatGPT can crunch numbers and make pretty charts too.
It’s like having a Swiss Army knife that suddenly learned how to perform surgery.
The Danger Zone
Not all software companies are doomed, but some are definitely sweating. The biggest risk? Companies that sell basic tools to small businesses. Think website builders like Wix, project management tools like Asana, or marketing platforms that essentially put a fancy UI on what AI can now do natively.
Large enterprises will probably stick with their expensive, specialized software (compliance, security, and “nobody gets fired for buying IBM” mentality). But that 15-person marketing agency? They’re eyeing that $40/month ChatGPT subscription pretty hard right now.
The Survivors
Some companies have built actual moats that even super-smart AI can’t easily cross:
The Entrenched Giants: Salesforce, ServiceNow, and Palantir aren’t going anywhere. They’re too deeply embedded in big companies, and switching costs are brutal.
The Specialists: Companies like Autodesk (for engineering) or Guidewire (for insurance) deal with industry-specific complexity that goes way beyond “build me an app.”
The Infrastructure Players: Snowflake and GitLab actually benefit from AI getting better – more AI means more data processing and more code repositories.
The Bottom Line
We’re watching the AI boom narrow in real-time. A year ago, slapping “AI-powered” on your homepage got you a valuation bump. Now? You better have a real reason why ChatGPT can’t do your job.
The irony is delicious: the companies that rode the AI wave are now getting wiped out by… better AI. It’s like watching the meteor that killed the dinosaurs, except the meteor is also really good at Excel.
For investors, the message is clear: own the companies that AI makes stronger, not the ones it makes obsolete. Because in this game, you’re either the disruptor or you’re about to get disrupted.