The rise of artificial intelligence (AI) is rapidly reshaping software development and operations. As US developer and investor Mark andrison stated in 2011, “Software is Eating the World,” a sentiment now echoed with the phrase “AI is Eating Software.” Nvidia CEO Jensen Hwang made a similar observation at the annual developer conference in 2017, emphasizing AI’s growing dominance.

One company facing this disruption is Adobe, a prominent American software firm. The emergence of AI-based image creation tools like ‘Mid journey’ and ‘Dali‘ threatens the established position of Photoshop. While previously, professional editing skills were essential for photo modification, simple prompts can now achieve similar results. Adobe has introduced its own AI tool, ‘Firefly‘, but it faces competition from numerous cheaper or free alternatives. Despite exceeding expectations in the second quarter’s earnings, Adobe’s share price declined by 5%. Melius Research recently downgraded Adobe’s stock evaluation, citing concerns about ‘Firefly’s’ profitability, and Adobe shares have fallen more than 20% as the start of the year.

AI is fundamentally changing software design and distribution,enabling functionalities previously unattainable through traditional coding methods.

Challenges for Traditional Software Companies

“The AI tool is faster, cheaper, and more powerful, and there is a growing concern that the value of existing software products can be reduced.”

Concerns are rising that traditional software companies like Adobe face meaningful challenges. Adapting to AI-based technology requires significant investment,but increasing subscription fees to offset these costs may be unsustainable. Besides Adobe, other leading US software companies, including Sales Force, Work Day, Sage, and 3D design and simulation software company Dasso Systems, are experiencing declines. Experts suggest that AI tools are becoming faster, cheaper, and more powerful, raising concerns about the diminishing value of existing software products.