Goldman Sachs communicated to its clients in a research note dated Monday, 20 July 2026, that the recent broad sell‑off in European software equities is generating investment opportunities as the market re‑evaluates incumbent value propositions in light of rapid agentic AI adoption. Analyst Mohammed Moawalla highlighted that agentic AI is reshaping the enterprise software stack, altering customer priorities and accelerating the reallocation of investment budgets toward agile, well‑funded AI challengers, particularly those based in the United States. The note quantifies the decline, stating that the covered European software stocks have fallen on average about 37 % from their 52‑week highs.
Goldman does not anticipate a complete displacement of incumbents; instead, it expects AI to redistribute value across the software hierarchy. Incumbent firms are likely to retain control of foundational applications and mission‑critical, regulated systems of record, while incremental value is projected to accrue increasingly to the orchestration, agentic, and contextual layers that sit atop these core systems.
The analyst further observes a transition in software monetization models, moving away from pure seat‑based licensing toward hybrid structures that incorporate consumption‑based and outcome‑based pricing. He notes that cost dynamics associated with large language models (LLMs) will become a focal point as companies aim to optimise AI spend against return on investment.
Drawing on historical disruption cycles, Moawalla cautions that a multi‑year period may be required for software stocks to re‑rate from trough multiples, as the market digests AI product uptake from incumbents and clearer monetisation pathways emerge.