AI Is Shaking Software Stocks: Why The Market Overshot

2026-03-04 08:40:00 ET

By Stephanie S. Schneider, John Golden, CFA, and Israel Hernandez

The software industry is experiencing a valuation reset that has left many investors questioning the sector’s future. Multiples have compressed 40%-50%, pushing stocks to trade near or below their 20-year averages. Some companies are even embedding negative terminal value in their pricing. This dramatic shift stems from a single question - will artificial intelligence ultimately enhance software business models, or undermine them?...

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