Hua Er Jie Jian Wen·2026-02-15 07:39Core Viewpoint - Barclays believes that the current market panic regarding generative AI (GenAI) is based on a "worst-case scenario" assumption, predicting the extinction of traditional software companies, which mirrors the panic seen a decade ago with the rise of Amazon AWS [1][2] Historical Context - The current investor sentiment in the software sector is extremely negative, with a simplistic investment logic of buying AI newcomers and shorting traditional software [2] - This situation is reminiscent of the panic surrounding AWS's growth, where established software companies faced similar doomsday predictions, yet none went bankrupt due to AWS competition [4][5] Market Dynamics - Historical data shows that while AWS gained significant market share, it did not lead to the extinction of mature software companies; instead, these companies evolved and thrived [4][5] - The market's current indiscriminate sell-off of software stocks, with the IGV (software ETF) down approximately 24% year-to-date, is viewed as irrational [6] Mispricing Opportunities - Barclays identifies significant mispricing opportunities in the current market, particularly for companies with strong core record systems and specific domain moats that are being undervalued [1][6] - The panic selling creates an opportunity for investors to identify industry leaders that have been unfairly punished [7] Defensive Sectors - Two defensive sectors highlighted are: 1. Owners of record systems, such as Salesforce and SAP, which hold core enterprise data and are difficult to replace [9] 2. Vertical SaaS companies, like Veeva Systems and Tyler Technologies, which possess deep domain-specific data moats [9] Company Performance - Notable company performances include: - CyberArk's market cap surged from $885 million to $22.516 billion, a 2443% increase [8] - Microsoft and Google also saw significant market cap growth, with increases of 1048% and 871%, respectively [8] - Traditional companies like Teradata experienced a 73% decline, while others like Tableau and Splunk were acquired at high premiums [8]