Have software stocks reached an extreme washout yet?

Software stocks have been heavily sold off in 2026 amid fears that AI will disrupt traditional SaaS business models. RBC Capital Markets strategist Lori Calvasina warns that Wall Street has not yet cut earnings estimates enough for software names, so further downside could follow as EPS revisions turn negative and valuations reset. Key sector pressures include democratized development, seat compression from AI agents, and growth capture by infrastructure providers like Nvidia. Big-cap software names (ServiceNow, Salesforce, Adobe) have seen sharp declines, and analysts caution numbers may worsen in coming quarters, suggesting continued risk for the sector.