LIVE MARKETS-Software's AI comeback gathers pace

By Reuters News

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SOFTWARE'S AI COMEBACK GATHERS PACE

Software stocks are staging a comeback after spending much of 2026 in the technology sector's "penalty box", with UniCredit saying investors are reassessing fears that artificial intelligence would make parts of the industry obsolete.

Earlier this year, markets moved on the idea that AI agents could disrupt enterprise software, triggering a sharp de-rating despite resilient demand and earnings.

The sector also significantly lagged the chip sector as investors focused on AI infrastructure winners, with software shares recovering in recent weeks across enterprise applications and cybersecurity.

UniCredit strategist Tobias Keller says investors are now starting to recognise that companies are not replacing their software ecosystems with AI but embedding AI capabilities into existing platforms, data and workflows.

"It is becoming increasingly clear that most enterprises are not replacing their software stacks," he says. "The question is no longer whether AI will reshape software economics, but where value will accrue."

That may signal the next phase of the AI trade. Rather than focusing on infrastructure providers, investors are looking at firms with proprietary data, mission-critical workflows and durable customer relationships, he says.

UniCredit also notes the software sell-off was driven largely by valuation squeeze rather than poor fundamentals, while evidence is emerging that AI adoption is creating fresh demand opportunities.

"Established enterprise software and cybersecurity platforms may be better positioned than investors initially assumed."


(Danilo Masoni)

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Software https://tmsnrt.rs/4hwnkSS

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