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Arguably the worst prediction in the markets this year has been that artificial intelligence will give software stock a run for its money. “Vibe coding” enabled by tools like Anthropic’s Claude Code and OpenAI’s Codex, this view holds, will serve as a metaphorical asteroid for the digital dinosaurs about to be wiped out in the SaaPocalypse.
Guggenheim analyst John DiFucci argued Wednesday that, like the negative chatbot response, this pessimistic view is “illusion.” Software firms, he said, are “one of the best opportunities for patient investors” and, at least one day, investors come to the conclusion that the prevailing sentiment may pass.
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Apocalypse Not Now
Fears that AI will make traditional software offerings obsolete are the top motivator for investors in 2026: The iShares Expanded Tech-Software Sector ETF fell 12.4%. At the same time, the Nasdaq Composite, an index of the health of the broader technology sector, rose 12.2%. A surge in bailout requests in the private debt industry, which has led to over-leveraged funds being written off, has been fueled in part by investors’ concerns that they have too much exposure to software firms.
DiFucci said the deep selloff has reached a point where it has created a buying opportunity. “Evaluation means that many software companies will be forever downgraded by AI,” he wrote in an investor note. “We don’t believe that’s true.” He promoted software firms Check Point Software, Salesforce and ServiceNow, and their shares rose 2.9%, 4.2% and 6.6%, respectively. Check Point trades at 12.6 times its forward earnings, and Salesforce at 11.5, much lower than last year and well below the Nasdaq Composite average of 23.2. ServiceNow’s forward price ratio of 23.7 is up from 62.1 last year.
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While DiFucci acknowledges AI represents a “technological paradigm shift,” he makes the simple argument that “there is significant staying power in enterprise software. If a company uses it to help run its business, it will continue to use it.”
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For this reason, said Guggenheim, he believes that software firms “will at least continue (if not continue to grow at reasonable rates in most cases); they trade as if they will not, creating one of the best opportunities for patient investors in our operations.”
