BofA says fears of AI disrupting software are overstated
XLK•XLK•XLK•XLK•BofA Global Research says fears that AI will disrupt software are overstated. The S&P 500 software and services index is up nearly 5% year to date after falling about 27% earlier in 2026 and rebounding more than 30% from its early April lows.
Software stocks started 2026 under pressure as concerns about AI disruption weighed on valuations, but have since recovered sharply. BofA said the enterprise software industry is unlikely to disappear, arguing that established vendors retain critical data, business rules and systems of record.
BofA said software companies’ advantages are evolving, with trusted business data, embedded industry knowledge and control over AI actions potentially becoming stronger defenses. It also warned that seat-based pricing could face pressure as AI agents do more work without adding users, and expects hybrid subscription and consumption-based models to become more common.
