3 Software Stocks to Sell Before AI Replaces Them Entirely

Enterprise software spending is still rising, with the global market projected to reach around $1.43 trillion in 2026, up 15.2% from the previous year. As companies invest heavily in AI, more of their IT budgets are shifting toward AI-first software, automated assistants, and specialized AI platforms. These tools aim to deliver similar results at a lower cost per user and with faster rollout times. The impact is straightforward: many established software companies that leaned on long-standing products and gradual upgrades are now facing tougher pressure on both growth and profit margins, even while overall IT spending stays healthy.

That pressure became clearer on Jan. 16, when Citi cut price targets on three major enterprise software names: Datadog (DDOG), Fastly (FSLY), and Atlassian (TEAM). The firm pointed to AI-related disruption as a key reason, along with slower customer expansion and concerns about margins. All three stocks posted strong gains in earlier years, but competition is getting tougher from both AI-focused startups and the big cloud providers. Many of those larger players are now building AI tools and automation directly into their platforms, which is forcing investors to rethink how durable these companies’ advantages really are and what their long-term earnings power looks like.