Software stocks haven’t been able to shake off the narrative of artificial-intelligence disruption. In fact, those concerns seem to be deepening.

Shares of Salesforce and Adobe were hit hard on Tuesday, suffering some of the steepest losses in the S&P 500. Salesforce’s stock was the biggest loser — down 6.5% on the day to record its largest percentage decline since May 30, 2024, according to Dow Jones Market Data.

Adobe’s stock slid 5.4%, ranking as Tuesday’s third-worst daily performer on the S&P 500 and closing at its lowest level in more than three years.

Investors are concerned that productivity enhancements from AI will reduce demand for these traditional software giants’ services. Additionally, the AI features that Salesforce and Adobe have rolled out are still in the early stages of adoption, leaving investors skeptical of their value. Adobe’s stock has shed more than 24% over the last year, while Salesforce’s stock has lost 23%.

David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, characterized the negative sentiment as part of a “pair trade” where investors are rotating money out of software stocks to put into the more popular semiconductor space.

Sentiment on Adobe continued to sour on Tuesday, as Oppenheimer analyst Brian Schwartz downgraded the stock to perform from outperform and removed his previous $430 price target. While Schwartz had previously been optimistic that Adobe’s AI initiatives could reaccelerate growth in its Digital Media business, “this did not play out as expected” in 2025, he wrote.

A key concern for investors is Adobe’s increased competition, spanning AI-native creative platforms such as Canva and Figma to Google Gemini’s Nano Banana. Schwartz believes this “challenging operating environment” will make it difficult for Adobe to grow its top line.

While Schwartz was more optimistic about Salesforce, he caveated that it’s still a “show-me stock,” meaning that the company will need to firmly demonstrate that its Agentforce product is receiving steady adoption.

To dispel negative AI sentiment, software stocks “are going to have to execute over a few quarters” to convince investors of their long-term viability, Wagner told MarketWatch.