AI can really disrupt everything! Private equity giants bluntly state: It is only natural that some software stocks are being devalued.

The co-founder of the American private equity investment giant Thoma Bravo, Orlando Bravo, who focuses on software and technology industries, said on Tuesday that artificial intelligence will disrupt software companies faster, and it is "very reasonable" that some companies' valuations are irreversibly impacted. Speaking at the Thoma Bravo investor conference in Miami, he stated, "There are many software companies on the public market that will be thoroughly disrupted by cutting-edge artificial intelligence technology. These software companies will be disrupted by AI no matter what." Bravo did not name the software companies he believes should have their valuations significantly lowered, nor did he specify which companies are facing the risk of being completely disrupted. Thoma Bravo, which specializes in software investments, was founded in 2008. As of December 2025, the company manages assets worth over 183 billion dollars, investing in 77 companies. In the global software investment and technology mergers and acquisitions circle, Thoma Bravo is considered a top player. More specifically, it is very well-known in the "software/technology private equity" sector, especially when it comes to discussions about privatizing and acquiring enterprise software, cybersecurity, and SaaS companies, Thoma Bravo is a name that cannot be avoided. The narrative of "AI disrupting everything" has swept through global stock markets, especially impacting software stocks. With leading AI model companies like Anthropic and OpenAI recently launching a series of AI agent products focusing on efficient workflow, they are likely to replace certain functional software services at a much lower cost, resulting in a heavy sell-off in global software stocks. The iShares Expanded Tech-Software Industry ETF (ticker: IGV), which tracks the US software industry, has dropped significantly by about 28% from its historical high in September, entering a deep bear market territory. The pessimistic tone of "AI disrupting everything" since February is mainly due to market concerns about AI agent workflows such as Claude Cowork and OpenClaw (formerly known as Clawdbot, Moltbot) becoming viral and widespread, potentially weakening the revenue streams of the entire software empire based on SaaS subscription model. This sell-off quickly spread to industries such as insurance, real estate, trucking transportation, and any other industry that appears to rely on subscription revenue or labor-intensive business models - the market believes that these industries will be completely disrupted by AI. Not only in the US stock market, but the software sector in global stock markets has been continuously plummeting since February under the fear of "AI disrupting everything." Despite the drastic increase in stock buybacks in the US software sector, investors are not convinced because the market is truly worried about the long-term fundamentals and business models being completely reshaped by AI entities like Claude Cowork and OpenClaw. The "Anthropic storm" that has ravaged software stocks continues to brew in global stock markets, and this selling frenzy is accelerating into traditional industries like wealth consulting and management, as well as real estate consulting - any industries that appear to be completely disrupted by AI. The market's pessimistic expectations of "AI disrupting everything" have been impacting various industry sectors like software, SaaS, PE, insurance, traditional investment banking, wealth management, real estate, and property management, causing them to take turns experiencing sharp declines. AI has been sweeping through each traditional industry over the past three to four weeks, accelerating the selling off of potential "losers." With a series of innovative AI entities focusing on agent-based workflows being launched, they have the potential to disrupt one traditional industry after another, suppressing pricing power in a broader economy. Since the beginning of this year, concerns about the "AI super wave" potentially compressing enterprise profits, disrupting employment, and bringing deflationary impacts have spilled over to various sectors such as software, private credit, real estate services, and insurance in the global economy. The core factor behind the recent crash in software stocks and the subsequent decline in various sectors is the pessimistic narrative of "AI disrupting everything." This narrative has been dominating global financial markets since February, triggered by a series of AI tools/agent-based AI collaborative platforms introduced by Anthropic, leading to a widespread sell-off wave in the SaaS subscription software sector and the software sector broadly. The "Anthropic storm" that has caused panic among global software stock investors strictly began a few months ago when Anthropic released a heavyweight legal plugin for its Claude Cowork, a rapidly popular AI entity worldwide. This super tool for automated contract review with extremely low technical barriers to AI automation caused the market value of companies like Thomson Reuters and LexisNexis' parent company RELX to evaporate by tens of billions of dollars. Software companies with weak moats may fall into the abyss, but some software companies are experiencing an "unjustified" large-scale sell-off. However, Bravo pointed out that some software companies have suffered an "unjustified" rare large sell-off in this wave of selling, emphasizing that they are "phenomenally large software platforms that will actually be big winners in the AI entity era." "These companies have been severely punished, and they shouldn't have been," he added. However, Bravo did not name these publicly traded software companies. John Zito, president of the alternative asset management giant Apollo Global Management, recently criticized private equity investment companies for their "arrogance" regarding software stock valuations. Zito specifically mentioned Thoma Bravo's significant acquisition of the software company Medallia for $6.4 billion in 2021. In response to the criticism, Bravo admitted that the company overestimated Medallia's growth rate during the acquisition. "We made a mistake, and that led us to pay a higher price," Bravo said. In recent months, global credit markets have been under severe selling pressure and asset redemption, as investors are actively evaluating how artificial intelligence will disrupt the revenue sources of SaaS vendors and software companies broadly. Over the past decade, alternative asset management giants like Blue Owl have heavily invested in software companies, attracted by their predictable profit curves and higher profit margins. As Morgan Stanley raised its direct loan default rate expectation to 8%, and earlier UBS judged that AI disruption would more significantly reflect on low-quality, high refinancing-demand credit assets in 2026 to early 2027, private credit default rates with labels such as "high software industry exposure, high leverage, high refinancing pressure" may rise significantly soon. In other words, if the pessimistic narrative of "AI disrupting everything" continues to dominate risk pricing, default rates are indeed likely to trend upwards, but it is more of a "structural rise in AI-disrupted sectors such as the software industry" rather than "full-on market mayhem in private credit." The true impact of cutting-edge AI technology is not on all software companies but on those companies with products whose functionalities are easily engulfed by model native capabilities, weak moats, heavy customization, and customers that can partially reconstruct functionalities using AI themselves. For these borrowers, the issue is not just about the decline in valuation but also about the sustainability of profit growth, pricing power, and renewal ability starting to be questioned; once growth assumptions are revised downward, credit structures based on high EBITDA multiples and high leverage quickly become fragile. A study by Fitch Solutions clearly points out that the most vulnerable software companies are often those that heavily rely on fixed implementations, heavy customization, and products that are easily replaced by internal AI development within companies. Therefore, private credit default rates are likely to continue to rise, with the rise being highly concentrated in software direct lending and other areas where business models are directly compressed by AI. Particularly dangerous is the combination of "AI disrupting everything" disruptions, low ratings, and upcoming maturity walls.