AI Concerns Fade, Investors Buy European Software Stocks on Dips
Claire Weston
Jensen Huang dismissed fears that AI would upend the software industry, sending SAP up as much as 8.8% — its best day in over a year. A UBS European software basket rose nearly 5%. With sector P/E multiples down ~20% year-to-date, some institutions see an opening.
What triggered this rally?
Nvidia CEO Jensen Huang publicly pushed back on the idea that AI will displace the software industry. This means → the market's biggest fear — "AI replaces enterprise software" — was directly rejected by the most influential voice in the sector.
SAP surged as much as 8.8% intraday, its best single-day performance in over a year. A UBS-compiled European software basket rose nearly 5%.
In plain terms = one statement lit up the entire sector, which tells you how much of the prior sell-off was driven by sentiment, not fundamentals.
Why had European software stocks fallen so hard?
In February, Anthropic launched a wave of new AI products, sparking fears that enterprise software could be made obsolete. European software stocks sold off sharply.
Year-to-date, European software P/E multiples have contracted by roughly 20%.
This reflects the sheer intensity of the "AI replacement" panic — valuations dropped by a fifth, yet actual corporate earnings showed no corresponding decline.
Which institutions are already buying?
Leonardo De Fezza, fund manager at Divas Asset Management, recently bought Wolters Kluwer, citing "very stable customer behaviour and strong cash-flow generation."
Gilles Guibout, head of European equities at BNP Paribas Asset Management, said he is watching Capgemini, SAP, Dassault Systèmes, Nemetschek, Publicis Groupe, and RELX.
His framing is blunter: "With long-term rates still rising, the sector has become a new value play." This means → he sees these stocks not just as a bounce trade but as structurally undervalued after an overshoot.
Why are retail investors still on the sidelines?
Emmanuel Cau, head of European equity strategy at Barclays, noted that despite solid sector earnings, retail investors remain on the sidelines.
His words: "Generalist investors haven't come back — they fear a value trap."
In plain terms = institutions see opportunity in the sell-off; retail fears more downside. That split itself shows the market has not reached consensus, and how far this rally can run remains uncertain.
Content is for reference only, not financial advice.