Nasdaq CEO Adena Friedman is convinced AI isn't a death knell for software

The global financial landscape is undergoing a historic shift as artificial intelligence (AI) integration reshapes business operations and productivity metrics. Nasdaq CEO Adena Friedman has voiced strong confidence that AI is not a death knell for software, emphasizing its transformative potential. The initial hype surrounding AI has matured into a fundamental restructuring of global markets. This shift has led to a divergence in performance between AI-enabled sectors and traditional industries, with the former outperforming in productivity and capital efficiency according to market analysis.

AI-driven automation has significantly boosted productivity in industries such as logistics, legal services, and software development. This has contributed to surges in technology-heavy indices like the NASDAQ and S&P 500. Traditional industries not adapting to AI are seeing declining competitiveness and margins. The AI revolution also reshapes global trade, with AI-driven robotics making near-shoring more cost-effective and creating a "Digital Divide" between nations with and without AI infrastructure according to industry reports.

Regulators are playing catch-up with the "Compute Tax" and "sovereign AI" requirements, which may impact global scaling strategies for tech firms. Looking ahead, AI and energy intersections represent a major opportunity, with companies like NextEra Energy becoming crucial for the next bull market phase.

Why Did This Happen?

The catalyst for this shift was the early 2026 earnings season, where the focus transitioned from building AI to profiting from its use. Breakthroughs in on-device AI and specialized models for heavy industries confirmed the real ROI of AI integration. Institutional investors and central banks now emphasize Total Factor Productivity, a metric that has seen its sharpest rise in decades.

What Are Analysts Watching Next?

AI apps face a retention paradox—strong early monetization but higher churn. The 2026 State of Subscription Apps Report by RevenueCat shows AI apps lose paying subscribers 30% faster than non-AI apps. The report also indicates higher refund rates for AI apps, suggesting issues with long-term user value and satisfaction.

C3.ai faces investor lawsuits over alleged misrepresentation of revenue from its sales partnership with Baker Hughes in its IPO registration statement. Investors are given the green light to pursue a modified lawsuit but are not permitted to revise their claims further. The court dismissed claims against Baker Hughes as a minority shareholder.

BigBear.ai is expanding its defense technology capabilities through strategic partnerships with C Speed and Fincantieri. The company aims to strengthen its position in government and defense technology markets by combining AI and radar technologies. These collaborations are expected to enhance real-time intelligence solutions and improve operational efficiency in shipyard programs.

Innodata is positioning itself in the evolving AI ecosystem with a hybrid AI model that combines human expertise with automation and synthetic data. This approach is expected to improve operating leverage and support margin expansion as automation tools scale. The company's financial performance in 2025 was impressive, with revenue rising 48% year over year to $251.7 million.

How Did Markets Respond?

C3.ai’s Q3 fiscal 2026 results reflected operational challenges, with revenue missing expectations by 29.8%. The company has initiated a restructuring plan to improve efficiency and reduce costs by approximately $135 million. The restructuring includes a 26% reduction in global headcount and additional expense cuts.

The market for AI agent-based decision-making is expected to grow from $8 billion in 2026 to $215 billion by 2035. While C3.ai faces declining sales and restructuring challenges, SoundHound AI shows strong enterprise adoption and growing revenues, making it a more favorable investment opportunity.

AI apps face significant retention challenges despite strong early monetization. The 2026 State of Subscription Apps Report by RevenueCat indicates that AI apps convert trial users to paid subscribers 52% more effectively than non-AI apps. However, they lose subscribers at a faster rate, with annual retention rates at 21.1% compared to 30.7% for non-AI apps.

The fast-evolving nature of AI technology and user behavior of experimenting with multiple apps contribute to higher churn rates. AI apps must focus on building deep workflow integration, consistent value delivery, and community building to improve retention and ensure long-term success.

What Are Analysts Watching Next?

Developers need to treat retention as a deliberate problem to solve through infrastructure improvements such as flexible billing models and payment recovery systems. These strategies aim to reduce churn and ensure long-term user loyalty. The market for AI agent-based decision-making is expected to grow significantly over the next decade. Analysts are monitoring the performance of companies like SoundHound AI and Innodata as they navigate this evolving landscape according to market analysis.

C3.ai’s restructuring plan is expected to generate about $60 million in annualized savings from workforce reductions and additional expense cuts. The company guided for fourth-quarter fiscal 2026 revenues of $48 million to $52 million and full-year fiscal 2026 revenues of $246.7 million to $250.7 million.

Innodata’s innovation pipeline includes agentic AI evaluation systems, adversarial testing frameworks, and robotics data engineering. These developments open new high-value use cases across enterprise AI and physical AI markets. The company believes its hybrid model will become more margin accretive over time.

BigBear.ai’s partnership with C Speed and Fincantieri is expected to strengthen its offerings for defense and intelligence agencies. The collaboration aims to improve operational efficiency and support modernization initiatives in defense-related shipbuilding programs.

The AI revolution is now a reality, not a future prospect, with investors needing to focus on "resilient innovation." Companies that adapt to this shift are likely to see significant growth and competitiveness in the coming years.