Software stocks have taken a sharp hit this year, but Goldman Sachs sees opportunity in the wreckage.
In a new video update, Brook Dane, co-head of public tech investing at Goldman Sachs Asset Management, says the pullback has been broad and overly aggressive.
“So far this year, software stocks are down a staggering 20%. Basically, investors are concerned that agentic AI will replace many software products. But the selling has been completely indiscriminate.”
While some software business models could face pressure from artificial intelligence tools, Dane says there are names primed to emerge as winners from the AI-driven disruption.
“There’s a whole other class of software companies that we think actually stand to benefit from the changes that we’re seeing from this transformational technology.
Just look at the data companies, for example. AI is increasing the need for and the value of data. So, firms that collect and clean data are very well positioned.
And then there are security companies. AI can make it easier for bad actors to launch attacks, so companies that are involved in cybersecurity are more relevant than ever. If you turn away from stock prices and look at fundamentals, what you’ll see is that many companies involved in the data and security layer are seeing their businesses accelerate.”
According to Dane, the correction offers a golden opportunity for dip-buyers and long-term investors.
“The sell-off has dramatically cut into valuations, which means that the rewards for picking the right stocks could be that much higher. So we’re looking to take advantage of the opportunities that this pullback has created.”
Wedbush’s Dan Ives mirrors Goldman’s view that AI is bullish for cybersecurity, believing that 2026 will be a golden year for the subsector. Meanwhile, Altimeter’s Brad Gerstner said that data infrastructure companies are the early winners of the AI shift.
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