Software stocks are in free fall, and if you're holding Adobe, Intuit, Salesforce, or any other major application company, your portfolio has been bleeding for months.

Adobe is down day after day after day. Intuit has cratered from $675 in December to around $430 today - a 36% drop in two months. Snowflake, Shopify, CRM, Uber - pick your favorite software name, and chances are it's getting hammered.

The narrative on Wall Street is simple: AI is going to replace traditional software. A team of 10 engineers using AI tools can now do what 100 engineers used to do. That means SaaS moats are easier to break, competition will intensify, and pricing power will erode. As one software engineer on Reddit put it, "the productivity gain I experienced in the last 5 months is nothing short of scary good."

That explanation makes sense - until you look at what else is falling. Nvidia? Down. TSMC? Down. Broadcom? Down. Amazon Web Services? Also getting hit.

Wait, what? If AI is killing software companies, shouldn't the companies making the AI chips and infrastructure be soaring? If software is doomed, who's buying all those GPUs?

Here's what's actually happening: The market is spooked, and when investors get scared, logic goes out the window. The "AI will destroy software" story sounds smart, so traders are selling first and asking questions later. But they're also selling the AI infrastructure companies, which makes zero sense if the thesis is that AI demand is exploding.

This is classic panic selling dressed up as strategic repositioning. The truth is more boring: valuations got stretched, growth expectations were too high, and now we're seeing a correction. Some software companies will struggle as AI changes the game. Others will adapt and thrive. Most will be fine, just at lower valuations.

For retail investors, the question is whether this is a buying opportunity or the start of something worse. If you believe AI truly destroys SaaS business models, then selling makes sense. But if you think this is just a violent re-rating of growth stocks that got too expensive, the hardware and infrastructure plays look attractive here.

What doesn't make sense is selling both software and the companies that profit from AI replacing software. Pick a thesis and stick with it. Right now, the market is acting like AI is both the future and a disaster, which tells you this is more about fear than fundamentals.