Vibe-coding – a term coined by AI researcher Andrej Karpathy just under a year ago in Feb 2025 – seems to be reaching an inflection point. At the center is Anthropic and its Claude model family, which has been the recognized leader for coding for some time and is currently dominating the leaderboard for code tasks (although leaderboards themselves are starting to go out of style). People are talking about getting “Claude-pilled” and spending their holiday breaks on a “Claude bender.” (Claude’s web audience doubled in Dec 2025 year-over-year.) Non-technical WSJ journalists are using Claude to build interactive articles with graphics and buttons. And Anthropic continues to push adoption, with the release of the more user-friendly Claude Cowork (subscriber-only) as “a simpler way for anyone – not just developers – to work with Claude.” Industry watchers are calling this an “extinction-level moment” for software companies, resulting in the Morgan Stanley SaaS index being down 23% recently (from Dec 2024).

Background: “Vibe coding” references how developers can describe what they want the software to do – i.e. the “vibe” or intent – while letting AI handle the technical implementation details. Users can “forget that the code even exists,” which lets them “accelerate the rate at which you build intuition for what works and what doesn’t.” Vibe-coding became all the rage in 2025, as users realized how easy it was to build personal “micro apps” to solve their ultra-specific problems (akin to prior generations of no-code apps).

What is changing is how capable the tools have become and the pace of adoption by non-technical users. Claude Code with Opus 4.5 – the model released just before the Thanksgiving holiday – was a “game-changer.” It was called “an order of magnitude better than coding LLMs released just months before it.” More than a specialized tool wielded mostly by professional coders, it was “a general-purpose AI agent that [could] do almost anything on your computer.” People said the “Code” in Claude Code’s name was a misnomer, since the tool wasn’t about code at all – it was about solving problems.

People are getting started by subscribing to the cheapest Claude plan ($20/month), downloading the Claude desktop app, and maybe watching a YouTube video or two. With the more user-friendly Claude Cowork, users designate a specific folder that serves as a sandbox for files that Claude is allowed to read or modify (which means non-technical users don’t have to deal directly with the command line or a virtual environment). Some users go further and install Claude’s Chrome plugin to let Cowork navigate websites, or they might connect other 3rd-party apps they use (e.g. Canva).

The “democratization of software development” is just everyday people picking up a user-friendly tool to solve an annoying problem. People are using vibe-coding to make their own meal apps, make games for their family, rebuild their personal website, track their expenses, analyze a personal spreadsheet, organize their desktop, and more.

Vibe-coding isn’t just for non-technical consumers. Claude Code head Boris Cherny said this week: “When we first launched this [Feb 2025], I wrote maybe 5 percent of my code with Claude Code. And then in May, with Opus 4 and Sonnet 4, it became maybe like 30 percent. And now with Opus 4.5, 100 percent of my code for the last two months has been written by Claude Code. And I code every day.” 95% of the code by the Claude Code team is written using Claude Code. Claude Cowork was built in 10 days using Claude Code. One senior Google engineer reported: “I gave Claude Code a description of [a] problem, it generated what we built last year in an hour.” Claude’s ability has even made it hard for Anthropic to distinguish between candidates in its hiring (it allows candidates to use Claude for its take-home test).

That’s not to say that professional software developers aren’t using command-line interface (CLI) tools. If anything, there’s a growing bifurcation between vibe-coding tools for consumers (e.g. Claude Cowork, Google AI Studio in Build Mode) vs. professional tools for developers (e.g. Claude Code, Gemini CLI, OpenAI’s Codex). That said, as vibe-coding becomes more capable, we can expect both technical and non-technical workers to also wield vibe-coding more within their existing collaboration workflows (e.g. via Claude’s Slack integration).

Security and data privacy remain a concern. Cowork is supposed to only be able to access files that the user has granted it access to. However, Anthropic has warned that, despite its safeguards, prompt injection attacks are still possible. Perhaps even more likely is the scenario where Claude or another AI takes an undesired destructive action, like an important file being deleted. While Anthropic suggests that Claude be given "very clear guidance” to prevent this from happening, that may be unrealistic to expect if these tools are being wielded by ordinary,unsophisticated users.

It’s probably not the death of software, although it certainly spells the death of some software companies. In just this year, with less than a month under our belt, the Morgan Stanley SaaS index is already down 15%. Its basket includes previous stars like Salesforce (down 14% year-to-date), Adobe (down 14%), Workday (down 12%), and ServiceNow (down 13%). The price-to-forward earnings ratio for the basket of companies in the index is down to just 18 – the lowest on record, and well below the past-decade average of over 55.

Some contrarians are viewing this as a buying opportunity, given that pessimism has likely hit potential winners in this shift as well as the likely losers. There’s debate as to who will be the winners – Nvidia CEO Jensen Huang points towards the AI applications end of the stack as providing “the largest economic benefit.” Others believe software companies will need to pivot to become the holders of data, persistent memory, and context, providing an API-like interface for AI agents.

Anthropic is set to be one of the winners as it goes public this year, on the tailwinds of its success with Claude Code. The company has reportedly reached $9B+ in annual recurring revenue (up from $4B in Jul 2025), of which $1.1B+ (12%) is the fast-growing Claude Code business. Anthropic is still, however, losing $5.2B per year in EBITDA, despite reasonable 40% gross margins.

There’s also a long tail of startups looking to catch the vibe-coding wave. These include full-stack app builders (e.g. Replit, Lovable, Bolt, Vercel’s v0, Emergent, Mocha, Base44); mobile-first app builders (e.g. Anything, VibeCode); AI-augmented developer tools (e.g. Cursor, Amp, Augment Code); and vibe-coding hosting and ops (e.g. Vercel’s tooling, Tiiny.host, Runpod).

One final note – the proliferation of vibe-coding will have implications for energy usage. Using Claude Code for a day is roughly equivalent in electricity to running a fridge for a day – not an outlandish amount but it will add up if every person is using it. On the counterbalance, there’s obvious but hard-to-calculate efficiencies that will be gained from more people solving more of their problems. As electricity prices go up, one of those problems that AI will likely help people tackle is how to monitor and reduce their energy consumption.

May 30 2025 (3 Shifts): “Vibe coding” and personal apps

Aug 1 2025 (3 Shifts): Enterprises now prefer Anthropic over OpenAI