Amazon Web Services CEO Matt Garman suggested that investors might be worrying too much about the risk of artificial intelligence models slowing the growth of major software companies.
“Look, my own opinion is that much of the fear is overblown,” Garman told CNBC’s Jon Fortt on Thursday.
Technology stocks have sold off this year following the release of software built on top of AI models from the likes of Anthropic and OpenAI.
The iShares Expanded Tech-Software Sector ETF is down 24% so far in 2026, on par for the worst year since 2022, as inflation and rising interest rates drive companies to streamline post-pandemic technology spending.
Analysts have taken to labeling the drawdown in software as a service stocks as an “SaaS apocalypse.” Software executives have responded by saying core business metrics have not deteriorated.
The CEO of data analytics software company Databricks, Ali Ghodsi, said last week that he thought the correction is an overreaction.
Last week, Amazon said revenue from its market-leading cloud infrastructure segment grew about 24% to $35.6 billion in the fourth quarter, a larger sum than analysts had expected. The unit showed a 35% operating margin, widening slightly from the previous quarter.
“There’s a huge disruption,” Garman said. “AI is absolutely a disruptive force that’s going to change how software is consumed and how it’s built. And I would argue that the systems of record, as you call them, the SaaS providers and the large players of today have an inside track to winning that business. Now, they 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.”
AWS generates revenue from long-standing software companies such as Adobe, Intuit and Zillow, and it has picked up business from AI model developers. In November, the cloud announced a $38 billion spending commitment from OpenAI, which sells models for software developers in addition to ChatGPT subscriptions.
“Our perspective is that our customers are going to consume more compute technology and more infrastructure than they ever have, whether they run it themselves, whether they build it on top of AI, whether they buy it from SaaS vendors, whether they have some mix of that,” Garman said.
Large software companies have been releasing AI features, but their growth rates have not spiked. Two weeks ago, AWS customer ServiceNow reported that revenue increased 20.7% year over year in the fourth quarter, down from almost 26% two years earlier.
Concerns about AI disruption have spread outside of technology software. Florida-based Algorhythm Holdings said on Thursday that an AI product is enabling logistics clients to quadruple freight volumes without raising headcount. C.H. Robinson Worldwide shares were down about 23% in midday trading.
