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AI Shift Extends Software Winter Regime

May 28, 2026 at 13:35 UTC

2 min read

Widespread AI adoption has redirected market attention and capital toward AI infrastructure and model providers, leaving many traditional software names in a prolonged valuation reset. The dynamic has produced a de facto software winter in public markets, where growth expectations and multiples for legacy enterprise applications remain structurally pressured.

Within this backdrop, Snowflake (SNOW) increasingly trades as a scarce AI-aligned data infrastructure asset rather than a bellwether for the broader enterprise software complex. Strong execution or upside results at SNOW can support its own premium, yet history shows that such outliers typically do not reverse sector-wide de-ratings once capital has committed to a new technology regime.

Prior cycles illustrate the pattern: Nvidia (NVDA) and Super Micro Computer (SMCI) massively outperformed from 2023 onward even as many non-AI software valuations stagnated, similar to Cisco Systems (CSCO) during the networking boom around the 2000 dot-com bust and Apple (AAPL) during the post-2007 mobile shift while PC makers such as HP (HPQ) and Dell (DELL) lagged. In each case, a handful of structural winners did not quickly restore prior multiples across legacy peers.

Large-cap software platforms like Salesforce (CRM), ServiceNow (NOW), and cybersecurity leader Palo Alto Networks (PANW) sit at the intersection of this regime change, with mission-critical roles but less direct ownership of core AI infrastructure. These names can still deliver solid absolute returns, yet their individual strength has so far proven insufficient to meaningfully alter the broader narrative that now favors AI-centric hardware, data infrastructure, and model-layer exposure over traditional application software.

References

  1. 1. https://markets.financialcontent.com/wral/article/marketminute-2026-2-19-the-great-2026-software-shakeout-ai-disruption-triggers-massive-sector-rotation-into-value-and-industrials
  2. 2. https://www.microsoft.com/en-us/corporate-responsibility/topics/ai-economy-institute/reports/global-ai-adoption-2025/
  3. 3. https://www.databricks.com/blog/state-ai-enterprise-adoption-growth-trends
  4. 4. https://www.nu.edu/blog/ai-statistics-trends/
  5. 5. https://www.pwc.com/us/en/tech-effect/ai-analytics/ai-predictions.html
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Assets in this article

HPQ
DELL
NOW
PANW

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