Software Stock Bulls are Still Making a Lethal Assumption

The future is not guaranteed to be bright or profitable for any person or company.

Software companies such as Workday (WDAY) and Salesforce (CRM) are facing existential threats to their stock prices. (Photo: Salesforce Facebook)

That could prove especially true for once-untouchable software firms now being battered by rapid AI advances from companies such as OpenAI, Google, and Anthropic, Yahoo Finance executive editor Brian Sozzi reported.

Software companies such as Workday (WDAY) and Salesforce (CRM) are facing existential threats to their stock prices — yet Wall Street bulls do not appear to be fully grasping the situation.

That is evident in how slowly analysts have cut forward earnings estimates.

In fact, earnings estimates for many software companies have trended higher despite seemingly daily evidence that AI could pressure future profits.

Snider notes that software stocks — as measured by the iShares Expanded Tech-Software Sector ETF (IGV) — have plunged 24% over the past three months, while two-year forward earnings estimates have risen 5%.

Similarly, industries recently perceived as most vulnerable to AI disruption — such as insurance brokers and advertisers — have seen positive revisions to their 2026 earnings-per-share estimates.

While Wall Street analysts are often optimistic when modeling future earnings, their approach to software stocks borders on nonsensical.

In markets, price action often reflects underlying truth — and the sharp declines in software stock prices suggest a potentially difficult reckoning ahead as AI reshapes the industry.