A hard lesson for software stocks as AI bots rise up

As clever coding chatbots encroach on tech company territory, shares hover at a historical low. Is the sector facing an existential crisis, asks Patricia Clarke

- 

RELX said artificial intelligence would drive its growth for “many years to come” after the FTSE-listed information and analytics group posted a 9% rise in 2025 operating profit on Thursday.

It was not enough to quell investors’ fears: RELX’s shares are down roughly 33% over the past month, as the company is caught in a broader selloff across technology stocks.

Big tech stocks fell sharply across the latter half of the week, following fears of Al disruption.

Software-as-a-service (SaaS) companies were at the epicentre of the selloff. The S&P North American Technology Software index dipped below 20x forward earnings last week for the first time on record, meaning investors are no longer willing to pay premium prices for the sector. Analysts at Jefferies screened 64 software stocks and found that “42% are trading at, or close to, their historical low valuation”. In the UK, shares in Sage Group, which provides accounting and business software, have fallen around 27% over the past month, while shares in Softcat, Kainos Group and Bytes Technology also slid over the week.

The so-called “SaaS-pocalypse” is driven by concern that agentic Al will bypass or replicate software products, and ultimately prove existential for companies who are unable to adapt.