Goldman issues a blunt warning to beat-up software stock investors
- - Goldman issues a blunt warning to beat-up software stock investors
Brian SozziFebruary 9, 2026 at 9:13 PM
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The Great Software Stock Rout of 2026 may be just the beginning, Goldman Sachs warned.
And one should look no further than how the rise of the internet in the early 2000s hammered the newspaper industry to get a taste of what may be to come.
"One lesson from historical examples of industries facing disruption risk is that share price stability requires stability in the earnings outlook. Newspapers, for example, faced risk from technological disruption as the internet grew in the early 2000s. The share prices of the group declined by an average of 95% between 2002 and 2009," Goldman Sachs strategist Ben Snider said in a new note.
Snider added, "The multi-year decline of newspaper stocks ended only as earnings estimates bottomed, and the litigation disruption of tobacco followed a similar pattern. In this case, the uncertainty around the eventual impact of AI means near-term earnings results will be important signals of business resilience, but in many cases insufficient to disprove the long-term downside risk."
The news flow around software stocks has been ugly as investors try to gauge how much profit in the space is at risk because of rapid AI advances.
The market fully believes software companies such as Salesforce (CRM), Workday (WDAY), Thomson Reuters (TRI), SAP (SAP), and ServiceNow (NOW) have their terminal values threatened by AI.
Graphs showing what software stocks may end up having in common with the newspaper industry. (Goldman Sachs)
Just look at what Anthropic (ANTH.PVT) debuted a week ago, which initially flew a little under the radar before sparking another software rout. The AI developer introduced plug-ins for its Claude Cowork agent that could automate tasks across legal, sales, marketing, and data analysis.
Read more: How to protect your money during turmoil, stock market volatility
Shares of Thomson Reuters, LegalZoom.com (LZ), PayPal (PYPL), Expedia Group (EXPE), Equifax (EFX), and Intuit (INTU) have all subsequently crashed. A strong buy-the-dip mindset in these stocks hasn't yet materialized, and it's unclear what positive catalyst could get investors interested again.
Software stocks are now underperforming the Nasdaq Composite (^IXIC) by the largest margin this century.
Big names have been railroaded, headlined by 27% declines in Oracle (ORCL) and Salesforce. Figma (FIG) — which IPO-ed amid much hype in 2025 — has seen its stock crater 41% this year.
"Software is contending with a steadily more bearish narrative, amplified by each new AI release that investors perceive as disrupting software," Evercore analyst Kirk Materne said.
"The common thread across nearly every software downturn is that the sector tends to outperform the S&P once it finds a bottom," he said. "The harder question is how much pain remains before getting there, but there are no 'silver bullets' in terms of shifting sentiment."
Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].
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