Orlando Bravo, co-founder of Thoma Bravo, a private equity giant focused on the software and technology sectors, recently issued a warning, asserting that cutting-edge artificial intelligence technology will disrupt the software industry at an unprecedented pace, making the valuation hits some companies are suffering “very reasonable.”
Speaking at Thoma Bravo’s investor conference in Miami, Bravo stated that numerous software companies in the public market face the prospect of being completely upended by advanced AI technology. Although he did not name specific companies that might be at risk or require significant valuation markdowns, he made it clear that this wave of disruption will sweep across the entire industry. Thoma Bravo (founded in 2008) is a top-tier investment firm specializing in software. As of December 2025, it managed assets exceeding $183 billion, with a portfolio comprising 77 companies.
This remarks come against a backdrop where the “AI disrupts everything” narrative is sweeping global stock markets, with software stocks bearing the brunt. As companies like Anthropic and OpenAI launch more powerful AI agent products capable of replacing certain traditional software services at lower costs, the market has begun to fundamentally question the software business model based on SaaS seat subscriptions. The iShares Expanded Tech-Software Sector ETF (IGV), which tracks the U.S. software industry, has fallen approximately 28% from its peak last September, entering a deep bear market. This sell-off is not confined to the software sector; it has rapidly spread to any industry perceived as potentially reshaped by AI, such as insurance and real estate, as investors accelerate their selling of potential “losers.”
However, Bravo also pointed out that amidst the widespread decline, some companies have experienced “unwarranted” selling. He emphasized that certain “phenomenal large-scale software platforms” are actually poised to become winners in the AI era, yet their stock prices have been unfairly and severely punished. He also declined to name these specific companies.
On the market front, analyst Gina Martin Adams recently issued a caution, drawing a parallel between the current stock market performance and the early stages of the Russia-Ukraine conflict, noting that the market’s reaction to economic pressures may lag. Although major U.S. stock indexes appear relatively stable recently, historical experience suggests this “resilience” might be temporary, and investors should remain vigilant about potential subsequent pullbacks. Since late February, the S&P 500 index has fallen about 3%, the tech-heavy Nasdaq composite is down 2%, while crude oil, the U.S. dollar, and cryptocurrencies have been among the few asset classes to post gains.
