2 Software Stocks Turning AI Fears Into Fundamental Gains

Summary

Software stock investors have had plenty of reasons to be bearish lately. New AI agents were expected to cut into valuable software revenue streams, and many analysts were ready to put the ‘per-seat’ business model on life support. But in the months following the software stock meltdown, a funny thing happened: these fears failed to materialize meaningfully in earnings. In fact, many of the companies with supposedly at-risk recurring revenue streams saw sales growth accelerate in the first quarter of 2026, and these stocks are now trading well below their historic valuation levels. Is it time to nibble on software stocks? Sentiment toward the sector remains very negative, and Morgan Stanley flagged SaaS debt as a concern, noting that 46% of software loans mature over the next four years. But the apocalyptic predictions appear to have been off base, and many software companies now see AI as a tailwind. We’ll focus on a pair of software stocks that suddenly look appealing from a fundamental and technical perspective.Get Atlassian alerts:Sign Up Software Stocks With Bullish Fundamental and Technical SignalsThe iShares Expanded Tech-Software Sector ETF BATS: IGV is still down more than 10% over the last 12 months, but the downtrend has been neutralized. Strong earnings have already boosted several companies in the space, including large caps like Oracle Corp. NYSE: ORCL and Fortinet Inc. NASDAQ: FTNT. Software stocks are also starting to benefit from the tech sector rotation as investors look to move away from pricey memory and chipmaker stocks without exiting the market entirely. The following two companies both helped put a nail in the “AI will doom software” coffin with their Q1 2026 results. Atlassian: Cloud Acceleration Blows Up Per-Seat Compression ThesisOne of the companies projected to take a hard hit from AI was Atlassian Corp. PLC NASDAQ: TEAM, which develops digital tools for workflow management. Atlassian Today$82.89 -3.34 (-3.87%) As of 12:02 PM Eastern Thi...