Global software stocks continued their turbulent decline this week. After a brief stabilization last Friday, concerns over the disruptive impact of artificial intelligence reignited, triggering a new wave of massive sell-offs.
The trigger for this round of sharp declines in software stocks is widely traced back to the collaborative platform for agentic AI introduced by Anthropic. The technology’s ability to automate white-collar task scenarios has led capital markets to reassess the valuation of the SaaS subscription model. The S&P 500 Software & Services Index has fallen approximately 13% since late January, with nearly one trillion dollars in market value wiped out in a single week. Panic has spread from the software sector to other industries, including insurance, property management, and logistics.
However, Byron Deeter, a partner at Bessemer Venture Partners, believes that the current US software sector is “absolutely in a deeply oversold state,” and the market chaos is precisely creating a rare “buy-the-dip” opportunity for savvy investors.
In an interview, Deeter compared the current market sentiment to the repair cycles following the COVID-19 pandemic and the global financial crisis, suggesting that the trajectory might follow a similar V-shaped pattern. However, he also issued a clear warning: this recovery will not replicate the synchronized rise and fall of the past. He emphasized that software companies with different growth prospects and fundamental expectations will experience “significant divergence” rather than a collective bottoming out and rebound.
Deeter described the current market as being in a “show me the money” mode. Investor attitudes toward software companies have shifted from optimism to caution, even adopting a “guilty until proven innocent” stance. While tech giants pledge continued investment in AI, the market is growing increasingly impatient with whether such expenditures can translate into tangible profitability. Only accelerating revenue growth and clear profit performance can regain the trust of capital.
In Deeter’s view, different software assets are facing distinct impact pathways from AI. He clearly distinguishes between horizontally vulnerable companies and large platform companies with strong moats. Functional, tool-based software companies like Asana (ASAN.US), DocuSign (DOCU.US), and Adobe (ADBE.US) are more susceptible to direct replacement by agentic AI. In contrast, vertical industry companies such as Shopify (SHOP.US) and ServiceTitan (TTAN.US), with deep payment integration and specialized market positioning, are relatively more stable.
The best-positioned companies are platform-based software giants like Microsoft and SAP. These companies focus on “AI + core operational processes,” possess solid fundamentals, and are not easily disrupted by the AI wave. Instead, they are likely to benefit from increased demand and valuation appreciation driven by intelligent transformation.
Consumer-facing platforms also demonstrate strong resilience. Deeter pointed out that companies like Airbnb (ABNB.US) and StubHub (STUB.US) have formed natural moats through market aggregation. The impact of AI agents on their core transaction logic is limited, allowing them to maintain a relatively defensive stance during periods of technological change.
Deeter also turned his attention to the private market. He believes the next wave of strong growth is likely to come from software companies that have not yet gone public. Companies such as Databricks, ClickHouse, and Canva are benefiting from AI-accelerated performance and already have the potential to become major IPO candidates. He described this trend as the prelude to a “software renaissance” and expects that high-quality assets will gradually be absorbed by the public markets in the coming years.
