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Software has been a crucial component of the modern economy, powering enterprises, automating decisions, and anchoring predictable, subscription-led revenues. For years, the sector earned a premium for its durability. That confidence has now cracked.
In early 2026, software stocks slid deeper into a sharp sell-off as markets began to question whether artificial intelligence (AI) strengthens incumbents or threatens to hollow them out. Valuations built on steady renewal cycles suddenly look fragile as fears grow that AI-native tools could compress pricing, disrupt workflows, and reset long-term growth assumptions.