Beyond the Hype: How On-Demand Code Generation Is Reshaping Software Defensibility and Value Creation

introductionsoftware

Written by Sam Hudson

with research assistance from Claude

Beyond the buzz of Ralph loops, GSD and deep agent frameworks1, it is hard to go on LinkedIn in 2026 and not be force fed articles on the impact of AI.

This most recent change does feel different, with some describing this as the first look at AGI. Stories such as that of a Shopify CEO 'one shotting' some MRI software2, and my own experience with using CLI Vibe Coding tools has made it hard to maintain scepticism on the quality of AI code output.3,4

Just like every generational transformation, a world of virtually unlimited on demand code will change the nature of how value is created and captured by businesses.

That is not just important for AI nerds like myself, it matters to every person and business who buys and uses software.

Across multiple articles, I aim to explore the impact of AI on the software industry. What is makes a company/product defensible now? What should procurement and investors be aware of in their valuations? And why might businesses make irrational decisions despite this?

Disclaimer: The views, opinions, and statements expressed in this article are strictly those of the author in their individual capacity and do not represent, reflect, or constitute the views, opinions, or official position of any employer, organization, company, or other entity with which the author is or has been associated. This article is provided for general informational purposes only and should not be construed as representing any corporate or institutional viewpoint.

A world of virtually unlimited on demand code changes the nature of value creation in the software industry.

Sources:

  1. https://deepagentsdk.dev/blog
  2. https://x.com/tobi/status/2010438500609663110
  3. https://arstechnica.com/ai/2026/01/hobby-github-repo-shows-linus-torvalds-vibe-codes-sometimes/
  4. https://www.bain.com/insights/new-diligence-challenge-uncovering-ai-risks-and-opportunities/

Key Takeaway: On-demand AI code generation and vibe coding tools are eroding traditional software moats. Features that once took months to build can now be produced in hours—fundamentally shifting the build vs buy equation for businesses. This changes how SaaS companies create value, how procurement teams should evaluate software subscriptions, and how investors should approach software defensibility in due diligence. This is the first in a series exploring what's actually defensible in the AI era, and what it means for anyone who buys, builds, or invests in software.