The Rundown Deep Dive: The Software Selloff Explained
Feb 14, 2026
They trace how SaaS rose to dominance through subscriptions, stickiness, and high margins. They unpack the 2026 selloff and which stocks and ETFs were hit hardest. They explore AI-driven threats like automation, vibe coding, and lean AI-native startups. They debate whether AI will replace or augment software and highlight which types of companies may survive a sector repricing.
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Why SaaS Was So Valuable
- SaaS became a Wall Street favorite because subscriptions create predictable, recurring revenue and high margins.
- Low marginal costs and customer stickiness made software an exceptionally valuable business model.
Valuation Peak And Fast Repricing
- Software valuations peaked in 2021 due to pandemic-driven demand and low rates, giving the sector a large premium.
- By 2026 the forward P/E for software collapsed below 20, signaling a major market repricing.
AI Triggered The Panic
- The sell-off was triggered by AI advances and plugins that automate specialized business tasks.
- Investors fear AI could replace niche software and shrink SaaS user bases, slowing growth.