Wall Street Is Down on Software Stocks. This Expert Says That's 'Absolutely Wrong'

Core Viewpoint - Concerns about artificial intelligence disrupting the software industry are deemed misplaced by veteran tech investor Orlando Bravo, who believes software companies are well-positioned to succeed in the evolving landscape [2][10]. Group 1: Industry Concerns - The software industry faces anxiety as investors worry that traditional software's share of enterprise IT budgets will decline due to the rise of AI-native applications [5]. - There is a growing concern that profit margins in the software industry may narrow as competition increases [5]. - The disparity in performance between tech stocks is evident, with the PHLX Semiconductor Index up about 12% this year, while the iShares Expanded Tech-Software Sector ETF is down more than 10% [6]. Group 2: Performance of Software Companies - Major software companies like Applovin, Intuit, and ServiceNow have seen their shares decline by approximately 20% this year, making them some of the worst performers in the S&P 500 [7]. - In contrast, shares of Sandisk have doubled in the past three weeks, highlighting the contrasting fortunes within the tech sector [7]. Group 3: Future Outlook - Analysts from Oppenheimer suggest that investor sentiment towards software stocks could improve if AI initiatives boost the industry's revenue and backlog growth [9]. - Bravo indicates that there is already evidence of AI positively impacting software companies, with significant increases in quarterly bookings reported [10].