Author: Zhao Ying
Goldman Sachs compares the current software industry to the newspaper industry disrupted by the internet in the early 2000s and the tobacco industry hit by heavy regulation in the late 1990s. Goldman Sachs believes the current valuation decline does not reflect short-term profit fluctuations, but rather a fundamental doubt about whether the software industry's long-term growth and profit margins still hold. Only when profit expectations truly stabilize can stock prices potentially bottom out.
When Wall Street starts using the 'newspaper industry' to describe software stocks, the market's fear of the AI impact has entered an extreme phase.
Analyst Ben Snider and his team at Goldman Sachs, in a newly released report, unusually compared the current software industry to the newspaper industry disrupted by the internet in the early 2000s and the tobacco industry hit by heavy regulation in the late 1990s. This analogy itself is enough to illustrate Wall Street's pricing of the 'AI impact on software business models'.
Goldman Sachs believes the current valuation decline does not reflect short-term profit fluctuations, but rather a fundamental doubt about whether the software industry's long-term growth and profit margins still hold.
Goldman Sachs提醒, when an industry is deemed by the market to face disruptive risks, the bottoming of stock prices depends on whether profit expectations stabilize, not on whether valuations are cheap enough.
From 'AI Dividend' to 'AI Threat': Software Stocks Face Collective Re-rating
Goldman Sachs pointed out that over the past week, software stocks have become the 'storm center' of the AI impact narrative, with the software sector plunging 15% for the week, down 29% from the September 2025 high. Goldman's 'AI at Risk Basket' (GS AI at Risk) has fallen 12% year-to-date.
The direct catalysts triggering the shift in market sentiment include Anthropic's release of the Claude协作插件 and the launch of Google's Genie 3 model. In the eyes of investors, these developments are no longer just 'productivity improvements' but are beginning to directly threaten the pricing power, moats, and even the very existence of software companies.
Goldman Sachs clearly stated in the report that the current market discussion is no longer just about profit downgrades, but about 'whether the software industry is facing a long-term decline path similar to newspapers'.
Valuations Seem 'Rationalized', But the Market Is Already Betting on Growth Collapse
On the surface, software stock valuations have significantly declined:
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The forward P/E ratio of the software sector has dropped from about 35x at the end of 2025 to about 20x currently, near its lowest level since 2014;
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The valuation premium relative to the S&P 500 has also fallen to its lowest level in over a decade.
But Goldman Sachs emphasizes that the problem is not the valuation, but that the assumptions behind the valuation are collapsing.
The report shows that the current profit margins and consensus revenue growth expectations of the software industry are still at their highest levels in at least 20 years, significantly higher than the average of the S&P 500. This means that the market's valuation sell-off implies an expectation of a significant downgrade in future growth and profit margins.
Goldman Sachs found through横向 comparisons:
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In September 2025, when software stocks were still at 36x P/E, it corresponded to a mid-term revenue growth expectation of 15%–20%;
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The current valuation of around 20x corresponds to a growth assumption that has dropped to the 5%–10% range.
In other words, the market is提前 pricing in a 'growth cliff'.
The Warning of the 'Newspaper Moment': Valuation Isn't the Bottom, Stable Earnings Are
The most attention-grabbing part of this report is Goldman Sachs's reference to historical cases.
Goldman Sachs回顾指出, the newspaper industry's stock prices fell an average of 95% between 2002 and 2009. The real bottom was not occur when macro conditions improved or valuations were cheap enough, but after consensus earnings expectations stopped being downgraded.
A similar situation occurred in the tobacco industry in the late 1990s: before the Master Settlement Agreement was reached and regulatory uncertainty was eliminated, even though valuations had been significantly compressed, stock prices continued to be under pressure.
Based on these cases, the conclusion given by Goldman Sachs is quite冷静甚至偏悲观:
Even if short-term earnings reports show resilience, it is not enough to negate the long-term downside risks brought by AI.
Capital Has Voted with Its Feet:远离 'AI Risk', Embrace the 'Real Economy'
Against the backdrop of rising AI uncertainty, market preference is shifting from远离 'AI risk' to embracing the 'real economy'.
Goldman Sachs data shows that hedge funds have significantly reduced their exposure to the software sector recently, although they overall remain net long; while large mutual funds began systematically underweighting software stocks in the middle of last year.
At the same time, capital is明显 flowing into sectors perceived to have 'lower AI impact', including typical cyclical sectors such as industrials, energy, chemicals, transportation, and banks. Goldman Sachs pointed out that its tracked Value factor and industrial cycle-related portfolios have significantly outperformed recently.
Although the overall tone is cautious, Goldman Sachs has not turned completely bearish. Its analyst team believes that some sub-sectors still have defensive qualities:
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Vertical software, because it is deeply embedded in industry processes and has high customer migration costs, is less likely to be directly replaced by AI;
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The AI impact on information services and business services companies with proprietary data and clear industry barriers may be overestimated by the market;
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Some companies highly related to software, but whose business model is not purely software, have recently shown signs of being 'wrongly sold off'.
But the premise remains clear: Only when profit expectations truly stabilize can stock prices potentially bottom out.
If the core narrative for software stocks in the past two years was 'AI will amplify growth', then this Goldman Sachs report marks a turning point—the market has begun to seriously discuss: will AI erode the商业 value of software itself. The real question is not whether software stocks can rebound, but which software companies can prove that they will not become the next newspaper industry.
