So here’s the thing about Valentine’s Day 2026: while you were buying overpriced roses, software stocks were getting absolutely ghosted by investors. And unlike your dating life, this breakup actually makes sense.
The headlines tell the whole brutal story. Palantir dropped 14% and is having what Barron’s diplomatically called “a terrible 2026.” Monday.com crashed 21% because apparently AI disruption fears are scarier than a horror movie. Unity Software? Let’s just say their guidance was weaker than your New Year’s resolutions.
Here’s what’s really happening: Software-as-a-Service (SaaS) companies used to be the golden children of Wall Street. They had this beautiful business model where they’d build software once, then sell subscriptions to millions of customers with basically zero extra costs. It was like printing money, except legal and way more boring.
But then AI showed up to the party like that friend who’s way too good at everything. Specifically, we’re talking about Agentic AI – think Anthropic’s Claude Cowork, which can basically do complex software tasks without breaking a sweat. Suddenly, investors are asking the uncomfortable question: “Do we really need all these subscription services if AI can just… do the thing?”
Take Palantir, for example. Even after losing 35% of its value since Halloween (spooky timing, right?), it’s still trading at 100 times estimated 2026 earnings. That’s like paying $100 for a $1 coffee because you think it might cure cancer. There’s zero room for error at those prices.
But before you start panic-selling everything tech-related, here’s the plot twist: not all AI plays are created equal. While traditional SaaS companies are getting the cold shoulder, there’s a whole category of “AI Appliers” that are actually thriving.
Think about Zimmer Biomet – they make joint replacements, but now they’re using AI to help surgeons plan operations and guide procedures. It’s not replacing their core business; it’s making it better, faster, and more precise. Hospitals aren’t just buying devices anymore; they’re buying entire surgical ecosystems powered by AI.
Or consider Match Group, which runs dating apps. Their AI literally decides who meets whom, which profiles you see, and how to keep creeps away. Every algorithm improvement directly translates to more matches, happier users, and higher subscription revenue. It’s like having a digital wingman that actually works.
The key difference? These companies use AI to enhance physical products or real-world services, rather than trying to compete with AI directly. They’re riding the wave instead of getting crushed by it.
So while software stocks are having their “it’s not you, it’s me” moment with investors, smart money is rotating into companies that apply AI rather than get replaced by it. The AI revolution isn’t stopping – it’s just getting pickier about who gets invited to the party.
The lesson? In a world where AI can increasingly do software tasks, maybe it’s time to bet on companies that use AI to do things AI can’t do alone – like perform surgery or help people find love. Because at the end of the day, even the smartest AI can’t replace good old-fashioned human chemistry.