Software stocks remain under pressure as investors grapple with what Wedbush dubs the “AI Ghost Trade” – fears that artificial intelligence tools from Anthropic, OpenAI and others could hollow out traditional enterprise software budgets.
The note argues the market is “baking in a worst-case scenario”, with speculation that AI deployments could cannibalise seat-based pricing in software-as-a-service models and slash IT budgets by as much as 70%.
Wedbush analyst Dan Ives called that view “extremely overblown”, saying the complexity of modern enterprise tech stacks – spanning data, security and core workflows – makes wholesale replacement unrealistic.
After carrying out industry checks, the analyst said he believes only a "handful" of organizations are acting now to integrate AI across their tech stacks "and this dynamic is not being factored into current valuations".
"We also note that many investors are concerned that Anthropic/OpenAI and other AI incumbents will change their mission to become the next step of enterprise software infrastructure, but after speaking with many across the industry over the past few weeks, this is more of a major stretch (at best) given the core focus on generating revenue around AI workflows."
Rather than replacing software infrastructure, Ives says he sees a more likely scenario being that AI tools will be used alongside existing platforms, boosting productivity while leaving core systems intact.
In his view, the current sell-off reflects “two worlds colliding”, but ultimately creates an opportunity for software names that can successfully embed AI into their own products through 2026.
"We continue to expect AI deployments to take multiple months, which allows many software companies to optimize their own AI strategies in 2026 and this will help define the AI software winners over the coming years."