Software opened the year as the market’s favorite casualty. The SPDR S&P Software &Services ETFNYSEARCA: XSW and the iShares Expanded Tech-Software Sector ETFBATS: IGV each dropped roughly 25% to 27% in the first quarter alone, as traders priced in a future where artificial intelligence (AI) made subscription software obsolete.
Software earnings never got that memo. Subscriber counts held or grew, revenue kept arriving, and the companies sitting on enterprise customer data started building AI into their own products—not losing to it.
Institutions noticed early. The money that fled software in the spring has been flowing back into the names with the stickiest customers, and several of those charts are already well off their lows.
That leaves a sharper question than whether software survived the AI scare. The real one is which companies are turning that scare into a tailwind, and whether the price action confirms it.
Owning the Customer Beats Fearing the Model in Enterprise Software
The AI-eats-software trade missed something basic chief market strategist at Chaikin Analytics. No large enterprise is going to tear out its customer relationship management (CRM) platform and swap in an AI imitation, however capable the model looks
History offers a useful comparison. Railroads and the 1990s fiber-optic boom both overbuilt capacity before customers were paying for it, and names like Global Crossing and Lucent became symbols of that excess.
The AI buildout differs in one key way, per Carmasino. Model developers such as privately held Anthropic already have fast-growing paying customers. And the biggest winners of the old fiber glut weren’t the builders. They were the companies riding cheap bandwidth, from NetflixNASDAQ: NFLX to YouTube parent AlphabetNASDAQ: GOOGL to Facebook, now Meta PlatformsNASDAQ: META.
That changes the frame. The AI infrastructure boom may work less like a threat to entrenched software companies and more like a subsidy, handing powerful tools to whoever already owns the data.
Not every software name qualifies. The ones that do pair locked-in customers with visible AI adoption.
Institutional Accumulation Marks a Turn for Customer Relationship Software
Salesforce Today
Salesforce
$233.74+4.61 (+2.01%)As of 03:59 PM Eastern This is a fair market value price provided by Massive. Learn more.
52-Week Range
$146.32▼
$269.11
Dividend Yield
0.75%
P/E Ratio
21.31
Price Target
$278.12
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SalesforceNYSE: CRM is the clearest example. The stock wasn’t sold because the business stopped making money, in Carmasino’s view. It was sold on a story, and steady accumulation is now reversing it.
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