🔍 Is AI Really Killing Software?
Discover our vision and the 5 software leaders best positioned to benefit from AI.
Global markets are near record highs, with tech leaders like Nvidia, Broadcom, Palantir, and TSMC hitting new highs thanks to the AI boom.
But not every corner of the tech sector is joining the celebration. While most chip and AI infrastructure stocks have risen strongly, the software sector is under pressure in recent weeks. Many big names in enterprise and consumer software have fallen sharply:
Salesforce: Below April levels and more than 35% under its December high.
Adobe: Down 21% this year and almost 50% below its peak.
SAP: 10% off recent highs, incl. a 6% drop Tuesday — its worst day since 2020.
Workday: Down 14% this year.
Monday.com: Fell 30% after this week’s earnings.
Atlassian: Down 50% since February, with more losses after last week’s earnings.
FICO: From $2,200 in May to $1,335 — almost 40% lower.
What’s going on, and why are so many software stocks struggling?
🤖 AI Fear in the Software Sector
One of the biggest worries in the sector right now is that AI could replace big parts of today’s software. If AI can quickly design graphics, write code, create marketing content, prepare taxes, or handle complex tasks, many current software products could lose their value.
That fear grew louder last week with the launch of ChatGPT-5. The new version from OpenAI can handle far more complex requests, connect with multiple tools at once, and produce results in seconds that would normally require several pieces of software. Paired with its ability to run custom “AI agents” in the background, ChatGPT-5 blurs the line between a chatbot and an all-in-one work platform.
For investors, the fear comes down to three things: losing revenue if customers switch to cheaper or free AI tools, new competition from AI-first startups, and lower valuations as some software is seen as less defensible — and easier to replace. It all leads to one big question: why would customers keep paying for standalone software if AI can do the same job faster, cheaper, and with less effort?
Is this fear really justified? Is AI truly going to kill software stocks, or is that too simplistic?
Further in this article, we’ll share our vision — and reveal the 5 software companies we believe are best positioned to succeed in the AI era. Exclusive for our premium members ✨
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