The recent selloff in software stocks has created what many analysts now view as a compelling opportunity for long-term investors, particularly after valuations across the sector took a sharp hit amid rising fears over generative artificial intelligence (AI) disruption. According to Morgan Stanley, the pullback in software multiples, roughly a 33% drop since October 2025, has pushed average valuations back to levels last seen during the peak uncertainty around the public cloud, presenting attractive entry points in high-quality names.
Analyst Keith Weiss argues that fears around AI have been overstated and that investors are underestimating the ability of incumbent software vendors to not just survive but thrive as AI adoption accelerates.
