Software selloff creates opportunities amid AI transition, Goldman says

Investing.com -- Goldman Sachs told clients in a note on Monday that a broad selloff in European software stocks, driven by the rapid rise of agentic AI, is creating opportunities as the market reassesses incumbent value propositions.

Analyst Mohammed Moawalla wrote that agentic AI "is reshaping the enterprise software stack, changing customer priorities, and shifting investment budgets at a pace faster than any previous technology transition."

The bank noted its European software coverage has seen share prices decline by an average of approximately 37% from their 52-week highs, as investors weigh incumbent offerings against "agile, well-funded AI challengers, particularly from the US."

Rather than expecting full disruptive displacement, Goldman Sachs anticipates AI will redistribute value across the software stack, with incumbents likely retaining control of base applications and mission-critical, regulated systems of record.

However, the bank said, "incremental value will increasingly accrue to the orchestration, agentic, and contextual layers built on top of these systems."

Moawalla added that software monetization models are transitioning from pure seat-based licensing toward hybrid structures incorporating consumption- and outcome-based pricing, with cost dynamics between large language models expected to become a greater focus as companies seek to optimize AI spend against ROI.

Drawing on prior disruption cycles, the analyst said it will likely take "a multi-year period for stocks to re-rate from trough multiples" as the market digests AI product uptake from incumbents and clearer monetization pathways emerge.

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