Investors are increasingly focusing on the potential for artificial intelligence (AI) agents to disrupt the software industry by coordinating business workflows and automating complex tasks. Even though tech investors are asking the right questions, there are signs that these concerns have been applied too broadly, according to Goldman Sachs Research.
“The recent software selloff reflects a rapid change in investor sentiment rather than a sudden deterioration in fundamentals,” Matthew Martino, an analyst at Goldman Sachs Research, wrote in the team’s report. There are “credible pathways for AI to enhance rather than undermine long-term growth.”
Investors have recently focused on AI platforms that can manage and coordinate multiple agents. Announcements related to these new agent orchestration platforms helped trigger the sharp revaluation of software stocks this year.
Are software stocks disrupted?
“The problem is that if AI agents become the primary interface for performing work, traditional platforms could be relegated to passive data stores,” Martino writes. This could erode their pricing power and strategic relevance, which is why their stock prices are falling.
Martino cites analysis from portfolio strategists at Goldman Sachs Research that suggests investors now expect slower growth from software companies. At their recent peak, software stock valuations implied a revenue growth rate of 15-20% over the medium term (2028). The now much lower valuation multiples correspond to an expected growth rate of only 5-10%.
“We recognize that rapid innovation in AI creates legitimate uncertainty and justifies a higher risk premium,” Martino writes. “Even so, we believe the price review was applied broadly rather than selectively.” This creates potential opportunities in software businesses where fundamentals remain intact despite high volatility, Martino says.
To understand the impact of AI on software companies, investors should take a closer look at differences in business models, end markets and how a product or platform delivers real AI capabilities, according to Goldman Sachs Research.
How to assess the potential impact of AI on software companies
The team created an “AI Impact Framework” to assess how and where AI can create risks – and opportunities – for software makers. They suggest investors consider six different aspects of a business:
- Orchestration risk: The possibility that horizontal layers of AI agents could bypass the platform and become the primary value generator
- Monetization model: Whether a business model is linked to users, which makes it more vulnerable, or to assets and data, which makes it more sustainable.
- Property of the recording system: If the platform governs approvals, compliance and execution, it is more difficult to supplant.
- Data and integration gap: If workflows depend on proprietary signals, structured data and operational records that reside inside the platform and must be accessible through it.
- AI execution: If the company provides real, integrated capabilities rather than conceptual roadmaps
- Budget alignment: Determines whether AI adoption increases or decreases the strategic priority of the category
For certain types of application software, agent orchestration could change engagement and value capture over time, particularly for products that function as lightweight user interfaces and where the business model is monetized primarily through seats or user licenses.
On the other hand, at the platform and infrastructure level, the dynamics can be fundamentally different. Agents can change how work is initiated, but typically increase requirements for data management, workload orchestration, security, and recovery. These are features located below the user interface and are not easily bypassed.
“The main investment question is not whether agents will change software (they will),” Martino writes. He says it’s more important to look carefully at the software stack (the set of systems and tools used by a company) to see where AI agents will disrupt and where they will augment existing products and platforms.
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