Software stocks decline sharply as investors reassess artificial intelligence impact

Software stocks have fallen sharply in early 2026, and analysts say some companies now look cheap enough to buy. Investors have been worried that artificial intelligence will replace many software products. This has pushed prices down across the sector. Atlassian has dropped over 40% this year, though its revenue grew 23% to $1.6 billion. Adobe has fallen around 30% and now trades at a low valuation. Microsoft has held up better, and 41 out of 50 Wall Street analysts rate it a strong buy. Shopify powers nearly a third of all online businesses in the United States. Morgan Stanley believes the selloff gives investors a chance to buy quality companies at historically low prices.