Software stocks just suffered their worst relative selloff on record, but Goldman Sachs says investor fear around artificial intelligence disruption has gone too far, creating rare opportunities in four deeply discounted names.



The iShares Expanded Tech-Software Sector ETF (NYSE:IGV)) has fallen for four straight weeks, declining roughly 22%, its worst four-week stretch since the pandemic. 



Relative to the S&amp;P 500 ETF – tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:SPY) – the drawdown is even more striking: a 21% underperformance, the worst ever for software — exceeding the dot-com bust, the Global Financial Crisis and the 2022 rate-hike shock.



&#34;The recent selloff in software reflects a rapid shift in investor sentiment rather than a sudden deterioration in fundamentals,&#34; Goldman Sachs analyst Matthew Martino said on Monday. 



<h2>Chart: Software Sector Suffers Worst Relative Slump On Record </h2>



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<h2>Why Market Panic In Software Could Be A Buying Window</h2>



Goldman Sachs said announcements such as Claude Cowork and OpenAI's Frontier have fueled fears that horizontal AI layers could replace traditional platforms. 



That narrative has compressed multiples broadly and indiscriminately, even for companies with strong data, infrastructure and mission‑critical roles.



Goldman's portfolio strategy team found that current valuations imply roughly a 10-point reduction in medium-term revenue growth expectations compared with prior peaks.



&#34;We recognize that rapid AI innovation creates legitimate uncertainty and warrants a higher risk premium,&#34; Martino said, but added the repricing &#34;has been applied broadly rather than selectively.&#34;



<h2>4 Software Stocks To Buy After the Selloff</h2>



1. MongoDB Inc. (NASDAQ:MDB) is down about 18% year‑to‑date versus IGV's 22% drop. Goldman Sachs sees the de‑rating as sentiment‑driven.



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It said operational databases like MongoDB benefit from AI‑driven demand for real‑time, stateful data. 



The firm said MongoDB's consumption‑based model aligns well with how AI workloads scale, supporting an upside case where Atlas revenue grows in the high‑20s in fiscal 2027.



Goldman Sachs reiterated a Buy rating and a $475 price target, using combined EV/sales and EV/free cash flow valuation.



2. Rubrik Inc. (NYSE:RBRK) has lagged peers with a roughly 33% YTD decline. 



Goldman Sachs highlighted high‑30s annual recurring revenue growth and record free cash flow margins. 



The bank said Rubrik's evolution into a data security platform positions it to benefit from AI's data proliferation, making its monetization tied to data under management rather than seats.



Preliminary results for the fourth quarter exceeded guidance, and Goldman Sachs reaffirmed a Buy rating, lowering the 12‑month price target to $80 from $120.



3. Procore Technologies Inc. (NYSE:PCOR): Procore's stock is down about 30% YTD. Goldman Sachs said concerns about workflow exposure in a potential AI agent world have weighed on sentiment, but its construction‑volume‑linked model and deep integration into governed workflows provide structural leverage. 



The firm expects steady revenue growth in the low‑to‑mid teens and continued expansion of free cash flow margins toward 30%.



Goldman Sachs reiterated a Buy rating and set a $75 price target, now solely based on an EV/free cash flow multiple.



4. Nutanix Inc. (NASDAQ:NTNX) has fallen roughly 22% YTD and about 47% over the past six months, the worst among its software coverage. 



Goldman Sachs said that reflects a mix of concerns around memory pricing and broader software de‑rating. 



It views Nutanix's hybrid multi‑cloud infrastructure positioning as strategic, with demand for hybrid environments likely rising with AI complexity.



Goldman Sachs reaffirmed Buy with a $60 12‑month price target.



<h2>What Investors Should Watch Next</h2>



Across these names, Goldman Sachs said AI does not uniformly threaten existing software franchises. 



Platforms that own critical data, orchestration layers or infrastructure are less likely to be disrupted and more likely to benefit as AI scales.



The report suggests investors willing to look through near‑term volatility may find long‑term growth opportunities in software stocks that have been indiscriminately punished.



Photo by wee dezign on Shutterstock

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Goldman Sachs identifies four software stocks as buying opportunities following a significant sector selloff, which saw software stocks underperform the S&P 500 by 21%. The firm argues that fears surrounding AI disruption are exaggerated. The recommended stocks include MongoDB, Rubrik, Procore Technologies, and Nutanix, each with specific growth potential and revised price targets. Goldman Sachs emphasizes that not all software platforms are equally threatened by AI, suggesting that those with critical data and infrastructure may benefit in the long run.

4 Beaten‑Down Software Stocks To Buy After Sector Crash: Goldman Sachs