Software stocks just endured their worst relative beating in history, and it wasn't even close. The iShares Expanded Tech-Software Sector ETF (IGV) has dropped roughly 22% over four consecutive weeks—its steepest decline since the pandemic chaos. But here's the kicker: relative to the SPDR S&P 500 ETF Trust (SPY), software has underperformed by 21%, eclipsing the dot-com crash, the 2008 financial crisis, and even last year's rate-hike meltdown.

Yet Goldman Sachs thinks the market has lost its mind. In a note published Monday, analyst Matthew Martino argued that investor fears around AI disruption have gotten out of hand, turning what should be a selective repricing into an indiscriminate bloodbath that's created genuine buying opportunities in four deeply discounted names.

"The recent selloff in software reflects a rapid shift in investor sentiment rather than a sudden deterioration in fundamentals," Martino said.

When Panic Creates Opportunity

The selling frenzy kicked into high gear after announcements like Claude Cowork and OpenAI's Frontier sparked fears that horizontal AI layers might replace traditional software platforms entirely. That narrative compressed valuations broadly, punishing even companies with strong data moats, critical infrastructure, and mission-critical roles in their customers' operations.

Goldman's portfolio strategy team crunched the numbers and found that current valuations now bake in about a 10-point reduction in medium-term revenue growth expectations compared with prior peaks. That's a massive reset.

"We recognize that rapid AI innovation creates legitimate uncertainty and warrants a higher risk premium," Martino acknowledged, but he added that the repricing "has been applied broadly rather than selectively."

In other words, the market threw out the baby with the bathwater, and Goldman thinks some of those babies are worth picking up.

Four Software Stocks Goldman Likes After the Crash

1. MongoDB Inc. (MDB)

MongoDB is down about 18% year-to-date versus IGV's 22% tumble, and Goldman sees the de-rating as pure sentiment with little fundamental justification.

The firm argues that operational databases like MongoDB actually benefit from AI-driven demand for real-time, stateful data. MongoDB's consumption-based model aligns naturally with how AI workloads scale, and Goldman's upside case has Atlas revenue growing in the high-20s percentage range in fiscal 2027.

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

2. Rubrik Inc. (RBRK)

Rubrik has been hammered harder than most, down roughly 33% year-to-date. But Goldman highlighted its high-30s annual recurring revenue growth and record free cash flow margins as signs the business is holding up just fine.

The bank said Rubrik's evolution into a data security platform positions it to ride AI's data proliferation wave rather than get crushed by it. Its monetization is tied to data under management rather than seat counts, which Goldman views as a structural advantage.

Preliminary fourth-quarter results exceeded guidance, and Goldman reaffirmed its Buy rating while adjusting the 12-month price target to $80 from $120.

3. Procore Technologies Inc. (PCOR)

Procore has shed about 30% year-to-date, weighed down by concerns that AI agents could eventually disrupt workflow software. Goldman isn't buying that narrative—at least not for Procore.

The firm pointed to Procore's construction-volume-linked business model and deep integration into governed workflows as providing structural leverage that's harder to disrupt. Goldman expects steady revenue growth in the low-to-mid teens and continued expansion of free cash flow margins toward 30%.

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

4. Nutanix Inc. (NTNX)

Nutanix has taken the hardest hit in Goldman's software coverage, falling roughly 22% year-to-date and about 47% over the past six months. The decline reflects a nasty combination of concerns around memory pricing and the broader software sector de-rating.

Goldman said Nutanix's hybrid multi-cloud infrastructure positioning is actually strategic in an AI-driven world. As AI complexity grows, demand for hybrid environments is likely to rise, not fall.

The firm reaffirmed its Buy rating with a $60 12-month price target.

The Bigger Picture on AI and Software

Across all four names, Goldman's core thesis is simple: AI doesn't 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 adoption scales.

The report suggests that investors willing to stomach near-term volatility might find compelling long-term growth opportunities in software stocks that have been indiscriminately punished by a market caught up in AI panic.

Whether Goldman is right or early remains to be seen. But at these valuations, the firm clearly thinks the risk-reward has shifted in favor of the buyers.