AWS boss says the cocaine nose jobs of Wall Street are overdoing their AI risk fears.
Technology stocks have had a rough 2026 as investors rethink what fast-improving AI tools mean for the companies flogging software.
The sell-off has been particularly sharp in software-as-a-service, where some analysts are now branding it an “SaaS apocalypse”.
The iShares Expanded Tech-Software Sector ETF is down about 24 per cent this year, one of its weakest runs since 2022.
The panic spiked after major model developers, including OpenAI and Anthropic, released new AI features that looked uncomfortably close to the capabilities SaaS vendors charge for.
Investors worry that AI could squeeze margins, reduce demand for traditional subscription products, or shift spending from apps to infrastructure.
Amazon Web Services’ chief executive, Matt Garman, has been trying to talk the market off the ledge, suggesting the reaction is getting a bit theatrical.
Garman told CNBC: “Look, my own opinion is that much of the fear is overblown, customers will still need more computing power and infrastructure, however they deploy AI.”
In his view, companies might build their own systems, rely on SaaS providers, or mix the two, but the baseline demand for cloud capacity should continue to rise.
That is the part AWS wants investors to focus on, because it gets paid when customers cannot stop consuming compute.
Amazon recently reported AWS revenue rose about 24 per cent year on year to $35.6 billion in the fourth quarter, beating analyst estimates.
Operating margins hit 35 per cent, slightly higher than the previous quarter, which is not exactly what you expect from a business supposedly about to be disrupted into the ground.
Those figures suggest cloud infrastructure spending has not slowed in step with the broader equity decline, even if investors are acting as if everyone is doomed.
Some big software firms have rolled out AI-driven features without seeing a dramatic revenue boost, which is adding to the jitters.
ServiceNow reported fourth-quarter revenue growth of 20.7 per cent, compared with nearly 26 per cent two years earlier.
That slowdown does not necessarily mean decay, but it has fuelled the idea that AI add-ons might not translate into faster growth immediately.
Garman is not pretending AI is harmless. He described it as “a huge disruption…a disruptive force that’s going to change how software is consumed and how it’s built.”
He warned that the incumbents cannot coast on brand and contracts forever, even if they have scale on their side.
Garman said large SaaS players “have to innovate, just like the rest of the world. They can’t stand still. If they stand still, they’re absolutely going to be disrupted.”
Markets love to front-run technological change, but the gap between expectation and measurable impact is still messy, which is why everyone is guessing with other people’s money.
