Software stocks are getting obliterated — and some of the smartest money on Wall Street is licking its chops.
The AI disruption trade just flipped on its creators. For years, SaaS companies were the darlings of growth investing — recurring revenue, fat margins, and a seemingly bulletproof moat around enterprise customers. Then AI showed up and asked a simple question: why pay $50 per seat per month for CRM software when Claude can build you something similar for free?
Salesforce shares have cratered 32.7% year-to-date. The selloff accelerated after Anthropic launched its Claude Cowork tool, which lets businesses automate precisely the kind of workflow tasks that SaaS platforms charge a premium for. Suddenly, that 150,000-customer installed base doesn’t look as sticky as it used to.
But here’s where it gets interesting. Fund managers with a value bent are calling this the most opportunistic buying window since the Covid crash of 2020. “Companies trading on rich multiples leave little margin for error,” argues one prominent value investor. “Even a modest shift in competitive dynamics can justify a meaningful de-rating.” The flip side? Once the de-rating happens, you’re buying quality businesses at prices nobody thought possible six months ago.
The numbers tell a nuanced story. Shopify still trades at over 80 times trailing earnings. ServiceNow sits above 100x. These are not cheap stocks, even after the bloodbath. But Salesforce — down 42% over the past twelve months — now trades at roughly 35 times trailing earnings. For a company with 90% of the Fortune 500 as customers and decades of embedded business logic that generic AI models can’t easily replicate, that’s starting to look like a real opportunity.
Dan Ives at Wedbush Securities, one of tech’s most vocal bulls, argues the selloff is overblown. He points out that Salesforce’s massive installed base creates “unique data and context” that competitors — including AI tools — will struggle to replicate. CEO Marc Benioff has been pivoting toward AI since 2014, and the company’s Agentforce product is already embedding agentic AI throughout its ecosystem. The market is pricing in disruption while ignoring adaptation.
The contrarian opportunities extend beyond pure SaaS. Staffing companies like PageGroup and Hays have been hammered on fears that AI will eliminate the need for recruitment agencies. Wealth managers like St. James’s Place, trading below 14 times earnings, have been swept up in the panic despite years of surviving “robo-advisor disruption” threats that never materialized.
The pattern is familiar to anyone who’s been through a market panic: fear is indiscriminate, and the selloff catches quality companies alongside the genuinely vulnerable. The investors who cleaned up after Covid did so by buying fundamentally sound businesses that the market had thrown out with the bathwater. This software crash is shaping up to be the same playbook — different trigger, same opportunity.