What Happened?
A number of stocks fell in the afternoon session after a confluence of high-profile AI talent departures from Alphabet, and a regulatory overhang pulled the entire communication-services and software complex lower.
Alphabet fell roughly 6%. Microsoft slipped as well. When the two largest software-adjacent megacaps decline together, the sector indices follow mechanically given their index weight. But the deeper driver was the market's persistent fear that AI agents would erode the subscription model that underpins traditional enterprise software economics. That fear had been compounding all year. Salesforce trades around $152, down roughly 43% year-to-date and near its 52-week low. Adobe fell approximately 49% over the past year and has not traded this cheap on earnings in over a decade.
The previous week's Accenture collapse, a near-20% single-day drop after the consulting giant cut its growth outlook and explicitly cited AI compressing demand for traditional IT services acted as a fresh confirmation of the thesis. If the largest IT services firm in the world is signaling that AI is eating its billable hours, investors extend the same logic to the software vendors whose products those hours configure.
The counterargument is that the selling has become indiscriminate. Salesforce is a Rule-of-40 company retiring 10% of its shares through a $25 billion buyback, carrying the largest AI revenue line in the category, and it is acquiring usage-based billing platforms like m3ter precisely to monetize AI agent actions rather than seats. Monness upgraded the stock to Buy the previous week on valuation. The market is pricing the cannibalization as if it already happened; the income statements might be indicating otherwise. But until these companies can prove that AI revenue scales faster than it erodes the legacy subscription base, software might remain in the penalty box even on days when the rest of tech (especially chip stocks) is celebrating.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Lending Software company Upstart (NASDAQ: UPST) fell 3.5%. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
- Project Management Software company Atlassian (NASDAQ: TEAM) fell 4.6%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
- HR Software company Asure Software (NASDAQ: ASUR) fell 5.2%. Is now the time to buy Asure Software? Access our full analysis report here, it’s free.
Zooming In On Asure Software (ASUR)
Asure Software’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock gained 4.8% as software stocks extended their rally, carrying momentum from one of the sharpest sector reversals of 2026.
The iShares Expanded Tech-Software ETF closed May up 21%, its best monthly performance since October 2001, after Snowflake's Q1 results and Dell's Q1 print over two consecutive evenings combined to break the "SaaSpocalypse" narrative that had driven enterprise software stocks 20-40% below their highs. Snowflake's revenue grew 34% to $1.39 billion, AI accounts jumped from 9,100 to 13,600 in a single quarter, and Dell confirmed $16.1 billion in AI server revenue (up 757%) against a $51.3 billion committed backlog. The combined message was that AI is accelerating enterprise software demand, not displacing it.
Nvidia CEO Jensen Huang's Computex keynote in Taipei framed agentic AI (autonomous systems executing tasks across enterprise infrastructure) as the defining platform shift ahead, directly validating the demand case for the software layer that governs, secures, and orchestrates those agents. ServiceNow rose 10%, bringing its two-session gain to 26% from the May 28 close of $108. Okta held its 30% post-earnings surge, with its identity platform increasingly positioned as infrastructure for enterprise AI agent deployment. MongoDB sustained its post-Q1 momentum after 25% revenue growth and a fourth consecutive quarter of Atlas growth at or above 29%. CrowdStrike held near its 52-week high of $731 ahead of its June 3 earnings.
Asure Software is down 13.9% since the beginning of the year, and at $7.83 per share, it is trading 31% below its 52-week high of $11.35 from July 2025. Investors who bought $1,000 worth of Asure Software’s shares 5 years ago would now be looking at only $927.73.
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