While parts of the US market continue to climb, one sector has become synonymous with capital flight and double-digit losses this year. Software, once the darling of growth investors, priced at premium multiples on the back of predictable subscription revenues, is now being fundamentally re-evaluated. The culprit isn't weak earnings or slowing growth alone. It's a deeper, structural question that AI has forced onto every boardroom table: can traditional software business models survive in a world where AI agents automate the very workflows companies have been paying for?

Software sector under fire: what's behind the sell-off of 2026

The year 2026 has brought a very pessimistic AI-related mood to the software sector. Investors who just a year ago were paying premium multiples for companies with fast-growing revenues and predictable subscription revenues are now reassessing those same companies with an unprecedentedly skeptical eye. This turnaround is not primarily driven by poor financial…