Key Takeaways
Goldman Sachs declared the recent selloff in software stocks an overreaction to AI threats, arguing that fears of obsolescence for firms with proprietary data are “overdone” after the iShares Expanded Tech-Software Sector ETF (IGV) plunged nearly 20 percent this year.
"The steep drop in valuations for information services stocks doesn’t reflect customers’ actual behaviors, but a worst case disruption scenario," Goldman Sachs analysts said in a new report. Services firms with a focus on proprietary data and regulatory compliance that are entrenched in their customers’ workflows “remain difficult to replace,” the analysts added.
The report highlighted data analytics firm Verisk, whose stock has fallen over 20 percent in 2026, and news provider Thomson Reuters, which the bank called “materially oversold” after a 33 percent decline this year. In contrast, Goldman downgraded consulting firm Gartner to Neutral, citing worries that the “business faces structurally higher AI risk.”
The note suggests investors are mispricing durable software names, pointing to S&P Global’s forward price-to-earnings ratio compressing to below 23 from 30 in January despite stable earnings. The report may trigger a re-evaluation of the sector, which has been battered by concerns over disruption from generative AI models like ChatGPT.
Goldman’s report draws a clear line between two types of information service companies. Those with unique, proprietary datasets and deep integration into regulated industries are seen as defensible. The bank expressed a bullish view on credit score companies like Fair Isaac (FICO), Equifax, and TransUnion, alongside financial data providers Moody’s and MSCI.
The valuation drop in these names has been stark. Equifax’s forward P/E ratio has slid to 20 from 30 since January, while TransUnion’s multiple fell to 15 from 20. Goldman noted this compression is unwarranted, as full-year earnings forecasts for Fair Isaac, MSCI, and Moody’s are actually higher now than at the end of December.
On the other side are firms more vulnerable to substitution by AI. Goldman warned that FactSet Research Systems and Clarivate, in addition to the downgraded Gartner, are at higher risk because AI can increasingly replicate the work of generalized research synthesis.
Other analysts agree that the market may be overlooking the benefits of AI. Analysts at 22V Research noted that companies like ServiceNow and IBM “have begun quantifying margin improvements from AI this earnings season,” suggesting investors are too focused on the negatives. This view is echoed in the recent investor letter from Deep Sail Capital, which stated the AI narrative around specialized vertical market software is "largely wrong," and that AI will provide a tailwind for the industry.
The Goldman report signals that the indiscriminate selling of software stocks may be nearing an end, with a greater focus on individual company fundamentals. For investors, the next round of earnings calls will be critical to see if more companies can quantify AI-driven productivity gains, as ServiceNow and IBM have begun to do.
This article is for informational purposes only and does not constitute investment advice.
