"It might be time to at least start thinking about the kinds of battered software names to pick up while they're heavily out of favor at the hands of the AI revolution. Of course, not every SaaS company will find a way to pivot and perform in this new era of AI agents. But, that said, the big question for value hunters is which firms are best positioned, given their unique moats (think data moats, AI expertise, and the ability to offer more value beyond what the model makers can) and management capabilities."
"Indeed, if there's a CEO who's left his seat or an AI strategy plan that's not all that crystal clear, there might be hidden risks that investors might need to model in. Either way, I believe that there's immense value to be had in the software scene, but, at the same time, there's also a lot of risk, given the profound haze of uncertainty that the new era of AI technologies has brought in."
"These days, you don't have to look too far for a bear on software who thinks that some of the major players are headed straight to zero due to the rise of AI firms that are hungry to take away some of the hearty lunches from SaaS companies. At the same time, though, Nvidia ( NASDAQ:NVDA | NVDA Price Prediction) top boss Jensen Huang, whom I view as one of the go-to experts when it comes to all things AI, thinks that the rise of AI and agents could actually work out in software's favor."
"There's definitely some truth to what Jensen says, especially when you consider that more digital labor means more need for certain kinds of software tools. In any case, I think investors would be wise not to shun any stock just because it's in software and just because the stock chart is looking horrid in recent years. Some software companies remain a giant question mark, and it's okay not to have an opinion on them. Others seem like they'd not only be resilient in the shift towards AI, but stand to be in an even better"
Software companies face uncertainty as AI agents reshape digital labor and competitive dynamics. Some investors fear major SaaS firms could be driven toward zero by AI-native competitors. Others expect AI and agents to increase demand for software tools because more digital labor requires more software support. Value hunters should identify firms best positioned through durable moats such as proprietary data, AI expertise, and the ability to deliver value beyond what model makers provide. Hidden risks may emerge when leadership changes occur or when AI strategy plans lack clarity. Even with poor recent stock performance, investors may avoid dismissing software stocks without assessing resilience and positioning.
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