Software: The Rebound Hasn’t Erased the Risks

Market data as of the August 27, 2026 close. All figures in US dollars.

The Thursday rally that revived US software stocks was not enough to erase the damage accumulated over the past 12 months. Salesforce gained 22.6% in a single session after reporting better-than-expected results and raising its guidance; ServiceNow rose 10%, HubSpot 7.9%, and PTC 4.8%. Yet behind the rebound, a deep divide remains between share prices and business fundamentals.

For much of 2026, investors questioned whether artificial intelligence agents would cannibalize SaaS licenses, reduce the number of paying users, and turn applications built over decades into interchangeable products. So far, the data tell a less uniform story.

The iShares Expanded Tech-Software Sector ETF, or IGV, was still lagging the broader technology market before the late-August surge. Nuveen CIO Saira Malik’s argument—that the panic has not translated into a widespread collapse in revenue and margins—is supported by several quarterly reports. But that does not mean every decline represents an opportunity.

AI is shifting value away from interfaces and individual seats toward proprietary data, workflows, governance, and measurable outcomes. Investors should therefore favor companies that control systems of record and can monetize automation, rather than simply buying whichever stocks have fallen the most.

The screen: four stocks down more than 20%

Among the leading US software companies potentially exposed to AI-driven disintermediation, four have been particularly hard hit, falling by more than 20% over the past 12 months: HubSpot (-46.3%), Intuit (-52.8%), PTC (-26.5%), and ServiceNow (-25.5%).

Adobe (-18.3%), Workday (-15.3%), Salesforce (-1.0%), Atlassian (-2.0%), and Autodesk also remain worth monitoring and are an essential part of the competitive comparison. The figures are highly date-sensitive: the August 27 trading session significantly reduced the losses recorded by Salesforce, ServiceNow, and other stocks.

ServiceNow: the “control tower” already has real demand

ServiceNow is the clearest example of business fundamentals outperforming the stock chart. In the second quarter of 2026, subscription revenue rose 24.5% to $3.877 billion, while total revenue reached approximately $3.99 billion.

Current remaining performance obligations—the contracted revenue expected to be recognized over the following 12 months—stood at $13.2 billion, up 21%. Total RPO reached $29 billion. The non-GAAP operating margin was 29.5%, while first-half free cash flow rose 14% to $2.3 billion. These are not the figures of a product heading toward rapid obsolescence. 

ServiceNow’s competitive advantage lies in its position inside critical corporate processes: IT service management, customer service, operations, security, and governance. The company reports a 98% renewal rate, a presence at 85% of Fortune 500 companies, and 95 billion workflows.

AI Control Tower and the Otto assistant are designed to govern multiple agents and models, rather than competing only at the language-model level. AI may reduce the number of human operators required for a workflow, but it also increases the need for orchestration, auditing, and control. That is where ServiceNow can capture additional value.

The main risk is valuation. At approximately 30.6 times forward earnings, 9.7 times sales, and 31 times free cash flow, ServiceNow remains the most expensive stock in the group. Revenue growth must remain above 20%, while AI-related contract value must generate incremental revenue rather than merely replace existing modules.

From a technical perspective, the $138.43 close moved decisively above the 50-day moving average, near $110.50, and the 200-day moving average, around $119.60. The breakout above the $130–$132 area is constructive, but a 10% one-day surge also increases the likelihood of a pullback.

Initial support lies at $128–$132, followed by $119–$120. The main resistance levels are $145–$150 and, above that, approximately $160. A disciplined entry would favor consolidation above $130 rather than chasing the gap higher.

Assessment: High-quality company with lower AI risk than the market had priced in, but only a moderate margin of safety. It is the strongest candidate for investors willing to pay a premium multiple in exchange for growth and visibility.

Intuit: this is not just fear of AI

Intuit is the cheapest stock in the group, but it is also the company where the expected deterioration appears most tangible.

In fiscal 2026, revenue increased 14% to $21.4 billion, while GAAP operating income rose 20% to $5.9 billion. Global Business Solutions revenue reached $12.9 billion, up 16%, while Consumer revenue increased 11% to $8.6 billion. Capital returns remained substantial: $5.5 billion in share repurchases during the year more than offset dilution from stock-based compensation. 

The fiscal 2027 outlook, however, calls for revenue growth of only 9%–10%, to between $23.28 billion and $23.51 billion, below analysts’ expectations. TurboTax growth is expected to slow to 2%–3%, while Mailchimp is projected to be flat or decline slightly. Management has acknowledged that pricing is the main reason customers leave TurboTax. 

This makes Intuit different from the other three companies. The market is not pricing in only a theoretical AI threat; it is also responding to pressure on perceived value and a strategic transition that will sacrifice short-term revenue.

AI can function as both a defense and an offensive weapon. QuickBooks is integrating a team of agents for accounting, collections, and financial analysis. Intuit also has proprietary financial data and approximately 100 million customers, creating an advantage that would be difficult to replicate.

Nevertheless, general-purpose models, cheaper tax software, and banking automation could compress pricing, particularly for simpler functions. Intuit’s moat is stronger in data, compliance, and integration with human experts than it is in the user interface.

At approximately 14 times forward earnings and 4.5 times enterprise value to sales, the de-rating has been severe. Technically, the structure is rebuilding: the stock is above its 50-day moving average, near $305, but remains below its 200-day average, around $436. The 14-day RSI is close to 59, indicating positive momentum without an overbought condition.

Support levels are located at $335–$340 and $304–$305. Resistance lies at $360 and $385–$390. Confirmation of a long-term reversal would require a recovery above the 200-day moving average, which remains far away.

Assessment: Intuit offers the greatest potential for a valuation rerating, but also the highest risk of becoming a value trap. Investors need evidence that new-customer acquisition can offset weaker TurboTax monetization and that Mailchimp is stabilizing.

HubSpot: 20% growth, share price cut in half

HubSpot presents the most interesting divergence between revenue growth and share-price performance. Second-quarter revenue increased 20% to approximately $912 million, or 17% in constant currencies. The non-GAAP operating margin reached 20.3%, while GAAP operating income returned to positive territory at $43.3 million.

The company had 306,446 customers. Quarterly operating cash flow increased to $222.8 million, while cash and short- and long-term investments totaled $1.4 billion. HubSpot also repurchased $531.9 million of stock during the quarter. 

The business model remains exposed to small and medium-sized companies, which are more sensitive to pricing and economic cycles. AI agents can also automate content creation, email campaigns, lead scoring, and customer support—the same activities HubSpot monetizes through its various software hubs.

Its defense lies in the integrated platform and proprietary CRM. Breeze embeds assistants and agents into workflows, while Customer Agent uses a credit-based model that links pricing to consumption. This is a decisive shift from charging per user toward charging for usage or outcomes. Investors must still verify that credit consumption generates incremental revenue rather than cannibalizing existing subscriptions.

The stock trades at approximately 17 times forward earnings, 3.7 times sales, and 16 times free cash flow. These are unusually modest multiples for a company growing close to 20%, even after accounting for stock-based compensation.

Technically, HubSpot has moved above its 50-day moving average, around $213, but remains below its 200-day average, which falls between $265 and $278 depending on the methodology. RSI is in the 57–68 range: momentum is positive, but the long-term reversal has not yet been confirmed.

Support lies at $235–$240 and then at $220. The $265–$280 range is the critical resistance zone; above it, the next significant level would be around $300.

Assessment: The strongest growth-to-valuation combination in the group, but with substantial volatility. A move above the 200-day moving average would be an important signal; a decline below $220 would restore the dominance of the bearish trend.

PTC: AI works with industrial data

PTC receives less attention from the broader market, but its CAD, product lifecycle management, application lifecycle management, and service lifecycle software is embedded in the development and maintenance of physical products.

In the fiscal third quarter of 2026, constant-currency annual recurring revenue—excluding divested operations—increased 9.1%, above the upper end of guidance. Net new ARR was approximately $60 million, while operating cash flow and free cash flow increased 7%. Growth is lower than at ServiceNow and HubSpot, but revenue recurrence and switching costs are high. 

Generative AI can accelerate product design, documentation, and searches across product data, but it requires an authoritative data foundation: versions, configurations, bills of materials, requirements, and traceability. PTC could therefore become the data layer on which industrial AI operates.

The greatest threat is not an independent chatbot. It is competition from Siemens, Dassault Systèmes, Autodesk, and hyperscale cloud providers, as well as the slower pace of the industrial cycle.

The valuation—approximately 18.9 times forward earnings, 5.8 times sales, and 18.4 times free cash flow—appears reasonable relative to the quality of revenue, but it does not come with a high growth rate.

Following the rebound to $158.95, the stock remains well below its 52-week high near $218. The 14-day RSI has risen toward 73, indicating that the stock is approaching overbought conditions in the short term. Its 14-day average true range is approximately $5.10, or 3.2%, pointing to manageable volatility.

Support lies at $151–$153 and $145, while resistance is located at $160–$162 and then $175. From a tactical perspective, waiting for consolidation appears preferable to buying immediately after the recent acceleration.

Assessment: The most defensive profile and the lowest AI-substitution risk, but its upside depends primarily on valuation expansion and cash flow rather than hypergrowth.

Ranking the stocks by risk profile

For investors with a three- to five-year horizon, the ranking does not correspond to the size of each stock’s decline.

ServiceNow offers the strongest competitive position and the greatest visibility, but it also carries the most demanding valuation. HubSpot combines growth and valuation more attractively, at the cost of greater exposure to small businesses and an immature AI monetization model. PTC is the defensive choice: slower growth, but high industrial switching costs. Intuit is the turnaround candidate, with substantial potential but insufficient operating confirmation.

The conclusion is less dramatic than the rebound itself: the sell-off has created investable valuations, but it does not justify indiscriminate buying.

Artificial intelligence has not yet destroyed the software sector’s fundamentals. It is, however, redefining which fundamentals deserve a premium. The likely winners will be companies that own data, workflows, and distribution—and can convert AI agents into measurable revenue. The rest may discover that a low valuation multiple is only the beginning of the adjustment.

Disclaimer: This material is provided for informational purposes only and does not constitute financial advice or an offer or solicitation to invest. Prices, estimates, and valuation multiples can change rapidly. Any investment decision requires an independent assessment of objectives, time horizon, and risk tolerance.