Goldman Sachs strategist Ben Snider said fears around AI disruption could weigh on software stock valuations for years, as investors reassess growth models.
Snider warned that uncertainty over how AI will reshape business models is likely to suppress growth stock multiples until companies prove their revenues are resilient.
The concern centres on “seat compression,” where AI agents replace multiple human users, threatening the per-seat pricing model used by many SaaS firms.
Software stocks have already been hit hard, with companies like ServiceNow down 48% and Salesforce falling 36% year-to-date, as the sector sheds roughly $2 trillion in market value.
Goldman said broad exposure to software is no longer effective, instead favouring selective positions in firms better positioned to benefit from AI adoption.
Large-cap tech names such as Meta, Amazon and Alphabet are expected to recover faster due to scale, data advantages and deeper AI integration.
The outlook reflects a broader shift in markets, with capital rotating toward AI infrastructure and physical assets as investors seek more durable growth amid rising uncertainty.