The new year was supposed to bring opportunities for beaten-down software stocks. Instead, the group is off to its worst start in years.

The release of a new artificial intelligence tool from startup Anthropic on Jan. 12 rekindled fears about disruption that weighed on software makers in 2025. TurboTax owner Intuit Inc. tumbled 16% last week, its worst since 2022, while Adobe Inc. and Salesforce Inc., which makes customer relationship management software, both sank more than 11%.

All told, a group of software-as-a-service stocks tracked by Morgan Stanley is down 15% so far this year, following a drop of 11% in 2025. It’s the worst start to a year since 2022, according to data compiled by Bloomberg.

Meanwhile, valuations for software companies keep getting cheaper. The Morgan Stanley basket is priced at 18 times earnings projected over the next 12 months, its cheapest on record, and well below an average of more than 55 times over the past decade.

bloomberg.com - No reasons to own software stocks sink on fear of new AI tool