Investors are punishing cloud hyperscalers for rising infrastructure budgets. Some SaaS valuations seem unsustainable. AI models from Anthropic and OpenAI are disrupting traditional software ecosystems. Software stocks have struggled in 2026, with iShares Expanded Tech-Software ETF down 20% this year. AI infrastructure spending is expected to surpass $500 billion, raising concerns about sustainability. Valuations in the SaaS sector, especially for AI stocks like Palantir, are under scrutiny for being too high. Some fear traditional software models are threatened by large language models from companies like Anthropic and OpenAI. While software stocks are volatile, investing in strong, diversified companies could be beneficial in the long term. Consider buying software stocks now, focusing on established leaders over speculative companies.

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