Software earnings from several companies this week come at a crucial time for a sector that’s been beaten down amid growing artificial intelligence concerns.

So far, 2026 has been a difficult year for software stocks. AI’s capabilities seem to improve each day. Companies like OpenAI, Alphabet, and Anthropic are releasing AI models that outperform their predecessors and offer new opportunities for users.

Watching AI evolve has been exciting for shareholders of companies that seem fit to benefit. However, investors are also hyper focused on the companies they think could be put in a bind as the tech continues to perform better and better.

The iShares Expanded Tech-Software Sector ETF has fallen 27% this year, its worst year to date performance through Feb. 23 on record, according to Dow Jones Market Data. The S&P 500 has declined 0.2% in the same time frame.

A major concern on Wall Street that’s led to the selloff is that AI will eventually disrupt or replace critical software functions. Anxieties over this possibility intensified earlier this year after Anthropic, the developer of the Claude AI large language model, released a plug-in to handle a variety of legal tasks. Then on Friday, Anthropic unveiled a security tool built into Claude, called Claude Code Security.

“Terminal value concerns brought to light following the release (and subsequent unprecedented scaling) of Claude Code are reasonable. But the market has so far treated all situations the same and in reality there will be winners and losers as there always are,” John Belton, portfolio manager at Gabelli Funds, wrote on Monday.

Wall Street will be paying close attention to upcoming software earnings to see who the winners and losers are stacking up to be. Workday results are coming after the stock market closes on Tuesday, Salesforce and Snowflake will report on Wednesday night, and Intuit will report on Thursday night.

Joe Mazzola, head trading and derivatives strategist at Charles Schwab, wrote on Monday that he believes software earnings—specifically Salesforce’s —will garner more attention than earnings from AI darling Nvidia, which is scheduled to report on Wednesday night.

“Salesforce reports at an auspicious time for the software sector after it and other software stocks got slammed earlier this month by concerns about AI competition,” Mazzola said. “That contrasts with recent resilience in the chip sector—where Nvidia is the biggest name—as 89% of chip stocks traded above their 200-day moving averages compared with zero percent of software stocks as of last week.”

The iShares Semiconductor ETF has risen 18% this year as investors bet that tech hardware companies will continue to benefit from the growing demand for AI. Megacap tech companies have committed to spending hundreds of billions more on building out the infrastructure necessary to power AI. That bodes well for AI hardware companies like Nvidia.

What’s less certain is how individual software companies will benefit from the continuing AI boom. These firms need to prove they are financially benefiting from their own AI initiatives to get back into investor’s good graces.

Salesforce, for example, needs to report accelerating growth for Agentforce—the company’s AI agent platform. Last quarter, Salesforce’s Agentforce platform posted $540 million in annual recurring revenue, a 330% increase from the prior year.

Jefferies analyst Brent Thill wrote in a note on Monday that Salesforce is
the “best positioned among apps vendors to deliver on AI agents; success will lead to overall acceleration.” He rates Salesforce as a Buy with a $250 price target.

Meanwhile, Thill downgraded shares of Workday, Docusign, Monday.com, and Freshworks to Hold from Buy on Monday. He’s concerned about the competitive risks AI presents to these firms, and needs to see proof that these companies can continue to grow despite these challenges.

Experts overall think the companies that have already made progress on the AI front, and have a large existing customer base, are best positioned at this time.

“Software companies with data control, proprietary IP, domain expertise and/or deep presence within workflows will be relatively better off, though all companies with loyal customers and good value propositions will have the opportunity to at least coexist with / develop and distribute products alongside foundation models,” Gabelli’s Belton said.

If the companies reporting this week can prove they have what it takes to thrive in an AI driven world, investors might be incentivized to buy in, especially as software valuations drop.

Salesforce is trading at 13.2 times earnings expected over the next 12 months, which is down from the 27.4 times forward earnings valuation it was trading at this time last year. Snowflake is trading at 94.5 times, compared with last year’s 176.5 times valuation. Workday trades at 11.7 times forward earnings, compared with last year’s 30 times, and Intuit trades at 14.1 times, compared with last year’s 27.1 times.

“The drastic re-rating of software stocks has brought valuations to historically low levels,” Adam Turnquist, chief technical strategist for LPL Financial, wrote on Feb. 17. He added that while low valuations can sometimes signal deeper structural issues, “we believe the recent re-rating may be overly punitive given the broader fundamental strength still evident across the software landscape.”