The recent bounce in software stocks is losing steam. A fresh round of disappointing outlooks from high profile names is pushing the sector back into the red and reigniting concerns about how AI could reshape traditional business models.
Investors are once again questioning whether high margin, recurring revenue software companies can defend their turf in an AI driven world.
Bad News Spreads Across the Sector
Dassault Systèmes $DASTY ( ▼ 20.84% ) plunged after reporting underwhelming fourth quarter results and issuing 2026 guidance that fell short of expectations. Analysts described the update as worse than even the most pessimistic forecasts.
In the US, Unity Software $U ( ▼ 26.33% ) also stumbled after delivering weak Q1 guidance. Both its gaming engine and ad tech businesses are facing pressure from AI tools and new competitors. Peer AppLovin $APP, which reports next, is also trading lower as investors brace for similar risks.
Big Names Feel the Heat
The selling is not limited to smaller players. Major software companies including Atlassian $TEAM ( ▼ 6.4% ) , GitLab $GTLB ( ▼ 4.85% ) , Salesforce $CRM ( ▼ 4.37% ) , ServiceNow $NOW ( ▼ 5.54% ) , Adobe $ADBE ( ▼ 2.84% ) , and Oracle $ORCL ( ▼ 1.71% ) are all moving lower in sympathy.
The broader worry is that AI could chip away at pricing power and growth rates across large parts of the software industry.
A Few Bright Spots Stand Out
Not every stock is falling. Teradata $TDC ( ▲ 29.59% ) is bucking the trend after posting stronger than expected results and guidance, sending its shares sharply higher.
Still, the overall tone in software has turned cautious again, as investors weigh how quickly AI driven disruption might start to show up in earnings and outlooks.