NVIDIA Did It Again — But Is the Real Story Bigger Than the Numbers?

NVIDIA’s latest earnings have reset the narrative once again. An explosive Data Center growth, record free cash flow, and continued dominance in AI infrastructure reinforced the message that AI demand is not slowing.

• Earnings per share: $1.62 vs. $1.54 expected.
• Record quarterly revenue: +73% (Y-o-Y), $68 bln vs. $66 bln forecast. Data centers accounted for $62 bln in revenue.
• Free cash flow: $34.9 bln — $20 bln more than a year ago.

The revenue from the Data Center division has increased by 1200% since the launch of ChatGPT.

However, the NVIDIA’s CEO believes investors are wrong about AI posing a threat to software companies. In his view, AI agents will use tools like Cadence, Synopsys, ServiceNow, or SAP instead of humans — enhancing productivity rather than replacing entire business models.

But where there’s smoke, there’s fire. Three weeks ago investors started thinking differently. February 3, 2026 may be remembered as the day the US market realized: AI is no longer just an assistant — it is becoming a direct competitor. A sharp selloff in software stocks, triggered by the release of a legal plugin from Anthropic, wiped out approximately $300 billion in market capitalization in a single session.

The cause of that selloff was a shift in the narrative: Anthropic introduced the Cowork Assistant plugin for its Claude AI model, capable of automating legal document preparation, conducting legal analysis, and handling complex prompts.

Investors immediately reassessed risks to SaaS companies. The market narrative shifted from: “AI enhances software” to “AI replaces software”. And this was perceived as a structural threat — not just to developers, but to companies monetizing services built on software.

The impact was most severe not on software developers themselves, but on companies delivering end services:

Thomson Reuters — down as much as 16%. Direct exposure through products like Westlaw.

LegalZoom  — fell 19–20%. Automated legal form services came under direct pressure.

London Stock Exchange Group (#LSEG) — declined between 8.5% and 12.8%.

Traders quickly coined the term “SaaSpocalypse” — a SaaS apocalypse marked by panic-driven selling “at any price”.

Basically, the sector didn’t destruct - it just started repricing itself. It is very easy to prove, as  AI does not eliminate services — it transforms them.  The market is currently failing to distinguish between “existential threat” and “growth tool.” AI accelerates development cycles and opens new use cases for established players.  Of course, human oversight remains essential: the experts are unanimous that AI cannot yet operate independently without supervision and domain expertise. The legal plugin itself explicitly states it does not replace licensed attorneys.  And, finally, the market may be overestimating the speed of displacement: historically, similar panics — during the dot-com era  — created entry points long before fears materialized in earnings reports.

We do not believe the software sector is facing the fate of pagers or Kodak’s film business.

AI is not a technology that destroys old markets.  It is a catalyst that reshapes them — and often expands them. The key question is not whether software survives, it is which companies adapt fastest.

For long-term investors, structural shifts often create the best opportunities — precisely when fear dominates the narrative.

So, back to NVIDIA – that’s what its CEO message was about.  But that company sits at a different layer.

It sells the infrastructure and the ecosystem. And whether AI replaces SaaS or enhances SaaS, compute demand still rises.

Of course, AI will not eliminate software.  But it will eliminate weak software. And the companies that integrate AI deeply, flexibly shift pricing models and maintain ecosystem control will likely thrive.

NVIDIA’s earnings reflect the infrastructure side of the boom. That’s why NVIDIA benefits in all cases, as AI sets the growth inside software, it replaces manual labor and drives automation. That’s why its business appears structurally advantaged.  So, are we buying?

The next chapter will determine who wins at the application layer.

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