Vibe coding is a low-key threat to software firms

Silicon Valley big shots once boasted that software would eat the world. Now fear runs rampant that AI will cannibalize these former tech darlings. Yet Silver Lake's mooted interest in taking private the $47 billion HR services firm Workday WDAY.O may boost confidence. A buyout of one of the biggest names in enterprise applications would suggest the sector has durable cash flows and additional value to extract.

For much of this year, investors treated business software companies as if they faced an existential threat. Autonomous agents and the ease of “vibe coding” tools, the argument goes, would let customers rip out Salesforce CRM.N, ServiceNow NOW.N or Workday and cheaply build their own replacements.

This idea overlooks some key customer incentives. Large companies need programs that scale, protect sensitive data, manage permissions and survive audits and changing regulations. Replacing them is a risky migration project. For instance, AI-generated code can produce security vulnerabilities, according to a report published by the UK National Cyber Security Centre.