Software stocks are getting massacred, and Wall Street can’t stop the bleeding.
The fear is existential: if businesses can throw a few prompts into Claude or ChatGPT and build their own tools at minimal cost, what happens to the companies charging $50-per-seat-per-month for features AI can replicate in seconds? Salesforce has the answer — its stock is down 32.7% in 2026 alone and 42.1% over the past 12 months. The market is pricing in a future where traditional SaaS moats evaporate.
But some of the sharpest value investors on the planet think the selloff has gone too far.
The argument goes like this: for years, SaaS companies traded at nosebleed valuations because investors assumed their fat margins and sticky subscription revenue would grow indefinitely. When AI emerged as a credible threat to that thesis, the de-rating was swift and brutal. But “de-rating” and “going to zero” are very different things — and the market may be confusing the two.
Consider the numbers. Shopify still trades at a trailing P/E above 80. ServiceNow’s P/E is north of 100. Even after the selloff, these stocks aren’t cheap by historical standards. The market clearly doesn’t believe SaaS is dead — it just thinks margins will compress. That’s a much more nuanced bet than “AI kills everything.”
Dan Ives at Wedbush Securities argues the Salesforce selloff is overblown. The company is deeply embedded in enterprise workflows, and switching costs are enormous. You don’t rip out your CRM because a chatbot can write emails. The real threat to SaaS isn’t replacement — it’s margin pressure from AI-native competitors who can deliver similar functionality at a fraction of the cost.
For value investors, this sets up an interesting dynamic. One fund manager compared the current moment to the Covid crash of 2020, when “many high-quality companies traded at deeply depressed valuations even as fundamentals began to stabilize.” The uncertainty around AI winners and losers has created exactly the kind of indiscriminate selling that historically rewards patient buyers.
The key insight: you don’t need to predict which SaaS companies will “win” the AI transition. You just need to find the ones trading cheap enough that even a mediocre outcome generates strong returns. When fear goes maximum and valuations go minimum, the math starts working in your favor — regardless of what the robots end up doing.
Not every SaaS stock will survive. But the ones that do? They’ll be bought at prices we’ll look back on as absurdly cheap.