MarketMoodz
AI-driven software selloff could spark a strong 2026 M&A year
A sharp AI-driven pullback in software stocks is setting the stage for what could be a blockbuster 2026 M&A year. Early-2026 trading shows a broad rotation as AI bets intensify, even as several software names lag and private equity firms eye consolidation.
Key Takeaways
- WCLD is down more than 8% year-to-date as the Nasdaq Composite has risen slightly, signaling sector weakness
- Salesforce, ServiceNow, and Adobe are each down more than 14% YTD after underperforming in 2025
- HubSpot, Atlassian, and Braze are each down more than 20% to begin 2026, underscoring AI risk to seat-based software
- ServiceNow fell for six consecutive trading days and is down 17% in January after announcing a deal to use OpenAI’s AI models for agents
- Orlando Bravo of Thoma Bravo says the firm is seeing incredible buying opportunities and plans to be more active in deals, signaling private‑equity fuel for M&A
People Involved
- Orlando BravoCo-founder of Thoma Bravo
- Marc BenioffCEO, Salesforce
- Jackson AderAnalyst, KeyBanc
- Rishi JaluriaAnalyst, RBC Capital Markets
Entities Involved
- WisdomTree Cloud Computing Fund (WCLD)ETF tracking cloud software companies
- Salesforce (CRM)Cloud software leader
- ServiceNow (NOW)Enterprise software provider
- Adobe (ADBE)Software company
- HubSpot (HUBS)CRM/Marketing software
- Atlassian (TEAM)Collaboration software
- BrazeMarketing software vendor
- Monday.com (MNDY)Work OS platform
- Asana (ASAN)Work OS platform
- Sprout Social (SPROUT)Social media management platform
- OpenAIAI model provider
- AnthropicAI startup
- Thoma BravoPrivate equity firm
MarketMoodz Analysis
The AI-driven rotation in software is reshaping investor expectations for 2026. The underperformance of marquee names alongside a wave of AI partnerships (for example, ServiceNow’s use of OpenAI models for AI agents) suggests buyers will pay attention to AI enablement in strategic due diligence, potentially accelerating deal activity even as certain incumbents face earnings pressure.
Analysts caution that some claims about AI products—such as Anthropic’s Claude-based enterprise agent Cowork—remain unconfirmed, adding a note of caution to the narrative. Despite that, the broader theme is clear: AI-enabled capabilities are becoming a gating item for value creation and consolidation, pushing buyers toward assets with defensible AI moat.
Market watchers expect 2026 to feature higher M&A activity as buyers seek AI-enabled capabilities and mid-sized players pursue financing options. Private equity, led by Thoma Bravo, has signaled readiness to be more active, while strategics weigh whether acquisitions can close the AI gap in their roadmaps.
Source: Original Article
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