Are There Still Bargains in Software? The SmartMoney Is Pointing Straight at These Names

The broad stock market may be strengthening, led by continued strength in technology, especially hardware and semiconductor-related companies. Software companies face more difficulty, with investors showing less willingness to give them the benefit of the doubt as AI and agents threaten traditional economic moats. Application-layer winners and losers are uncertain because AI-native companies and model makers are expanding quickly to demonstrate monetization potential. As monetization expectations rise, software stocks may remain under pressure, and selling could intensify, potentially creating deep value. Recent sharp declines in software names after earnings illustrate how quickly sentiment can shift, while rapid AI innovation disrupts software markets and drives a divergence between semis and software performance.

"The broad stock market might be heating up again, with the tech sector continuing to flex its muscles. But, underneath the surface, not everything is great for all corners of tech. The hardware players (semis and more) have been doing far more than their fair share of the lifting, while the software players have continued to drag their feet."

"It's hard to tell who wins and loses at the application layer, as AI-native companies and model makers look to expand their reach rapidly to show investors they can make big money, not just spend it. As the call for monetization grows, the software stocks could remain under serious pressure, and the selling might get out of hand, such that there's serious deep value to be had as the industry looks to enter depths not seen before."

"With Intuit ( NASDAQ:INTU | INTU Price Prediction) shares crashing 20% in a single trading session following an earnings beat, it feels like AI is absolutely going to take the lunch of the SaaS darlings that used to command a premium in the market. Nowadays, many such software names go for a discount in the market."

"And this discount might grow over time, especially with the pace of innovation going on in AI, which is quite unprecedented. It's going so fast that the disruptive wave is sweeping and things are breaking down in the software scene, while semis and all the names on the right side of the disruptive wave melt up in an equally explosive fashion."

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