• AI-driven growth expectations have inflated software valuations, now facing correction. • Investors fear AI could replace software jobs, reducing demand for traditional software services. • Earnings reports show slower revenue growth, prompting sell-offs in high-flying tech names. • Valuation multiples have tightened, with P/E ratios falling below 20x for many software firms. • Market sentiment shifts as AI adoption costs rise, eroding expected profit margins. • Analysts advise caution, recommending diversified portfolios over concentrated software bets.
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