Software Stocks to Rebound from AI Scare: D.A. Davidson's Gil Luria Analysis

Gil Luria, Head of Technology Research at D.A. Davidson & Co., delivered a contrarian bullish thesis on software stocks during his January 14, 2026 appearance on CNBC’s “Fast Money” segment [1]. His central argument challenges the prevailing market narrative that artificial intelligence represents an existential threat to established software enterprises. Luria contends that if AI were genuinely positioned to eliminate software business models, observable signs of disruption would already be evident in company performance metrics [2]. Given that the technology sector is now entering its third year of the AI transformation, Luria views the current negative sentiment as excessive and unsustainable.

The sell-off pressure on software stocks has intensified in recent sessions, with the technology sector recording its worst daily decline among all major sectors on January 14, 2026, falling -0.85% [0]. This weakness follows a broader software sell-off that began in earnest the previous day, when Salesforce shares plunged 7% — representing the stock’s steepest single-day decline since May 2024 — amid intensifying concerns about AI monetization timelines [3]. Adobe received a downgrade from Oppenheimer during the same period, with analysts warning that generative AI tools were failing to accelerate sales at previously forecasted rates, triggering sector-wide re-evaluation of software valuations [3].

The immediate market environment presents a nuanced picture of sector rotation and risk-off sentiment in growth-oriented segments. On January 14, 2026, the S&P 500 declined -0.16% while the NASDAQ Composite fell -0.39%, yet the Russell 2000 advanced +0.78% [0]. This divergence between large-cap indices and small-cap performance suggests investors are rotating away from mega-cap technology names toward smaller, potentially undervalued positions. The Consumer Cyclical sector also declined -0.89% on the same day, while defensive sectors demonstrated relative outperformance, indicating a broader risk aversion toward growth-oriented investments [0].

The Communication Services sector, which includes major software platforms, declined -0.43%, reflecting the specific pressure facing enterprise software companies [0]. This sector-wide weakness has created what Luria characterizes as a temporary buying opportunity for investors with longer-term horizons. The five-day performance metrics reveal continued volatility, with the NASDAQ down -0.04% and the Dow Jones Industrial Average declining -0.81%, while the Russell 2000 posted a +2.54% gain over the same period [0].

emerges as Luria’s primary recommendation within the software space, carrying a $220 price target that implies more than 50% upside from current levels [2]. The stock currently trades at approximately $124.38, representing a 24% discount to its 200-day moving average of $162.06 [0]. This significant discount to historical averages suggests substantial recovery potential if Luria’s thesis proves correct. CVLT has declined -19.70% from its period open, underperforming broader market indices during the same timeframe [0].

represents another infrastructure-focused software play identified by analysts, with Piper Sandler’s James Fish highlighting the company’s market share gains from VMware as a key competitive advantage [2]. NTNX trades at $51.44 with a 200-day moving average of $68.05, indicating 25% upside potential based on historical pricing patterns [0]. The stock has declined -18.00% from its period open, reflecting broader software sector pressure rather than company-specific concerns [0].

stands out as a strong performer within the software space, having appreciated +98.54% over the past 343 days [0]. Piper Sandler maintains a $75 price target on RBRK, representing modest upside from current levels near $68.14, suggesting the market has already largely priced in the company’s completed SaaS transition and growth trajectory [2].

has experienced particularly acute pressure, declining approximately 20% in 2025 while the S&P 500 gained 16%, representing significant relative underperformance [4][5]. The stock’s 7% single-day decline on January 13, 2026 led the Dow Jones’ 400-point retreat that day, reflecting investor skepticism about the company’s ability to monetize AI features effectively [3].

Luria’s analysis rests fundamentally on the distinction between perceived and actual AI disruption timelines. The prevailing market narrative suggests that generative AI tools will rapidly render existing enterprise software obsolete, creating a “business killer” scenario for software companies [2]. Luria counters this view by emphasizing the practical realities of enterprise technology adoption, which historically proceeds gradually as organizations integrate new capabilities into existing workflows rather than wholesale replacement of established systems.

This perspective aligns with observations from Truist Securities analyst Terry Tillman, who argues that concerns about “seat and license-based pricing” — the theory that AI makes humans more efficient and reduces the need for software licenses — fundamentally misunderstands the industry’s evolution toward consumption-based pricing models [2]. The emergence of agentic AI, featuring autonomous bots operating continuously, actually encourages consumption model adoption rather than reducing software demand.

The software sector’s performance is intimately tied to enterprise technology budgeting decisions, which occur on predictable annual cycles. Luria suggests that customer hesitancy regarding AI-enhanced software purchases is temporary and likely to reverse as enterprises gain clarity on AI value propositions and incorporate these capabilities into their technology roadmaps [2]. The current pause in purchasing activity, while creating short-term revenue pressure for software vendors, does not reflect a fundamental rejection of software value propositions but rather a period of evaluation and planning.

Not all software companies face equivalent AI-related risks or opportunities. Luria’s recommendation of Commvault, combined with analysts’ positive views on Rubrik, ServiceNow, and Nutanix, suggests a focus on companies with defensible market positions and clear AI integration strategies [2][6]. ServiceNow, in particular, has been identified by multiple analysts as a backbone for automated digital workflows and enterprise AI tools, positioning the company as a platform enabling AI adoption at scale rather than being displaced by it [6].

The performance dispersion within the software sector — with Rubrik gaining nearly 100% while Salesforce declines 20% — underscores the importance of company-specific fundamentals in determining outcomes during periods of sector-wide uncertainty [0]. This dispersion suggests that AI-related concerns affect software companies differentially based on their business models, competitive positioning, and execution capabilities.

The significant discounts at which many software stocks now trade relative to historical averages create what Luria characterizes as compelling entry points for long-term investors. The differential between current prices and analyst targets — exemplified by CVLT’s 50%+ implied upside — provides substantial margin of safety if the thesis materializes [2]. However, this valuation gap also reflects genuine uncertainty about AI monetization timelines and execution risks that investors must carefully weigh.

represents the most significant risk to Luria’s thesis. If AI integration into enterprise software proves more gradual than currently anticipated, software companies may face prolonged revenue pressure as enterprise customers delay purchasing decisions pending clearer value propositions [3]. The Oppenheimer downgrade of Adobe specifically highlighted concerns about generative AI sales acceleration failing to meet prior expectations, validating this risk concern [3].

poses a moderate risk as technology organizations may increasingly prioritize cost efficiency over new software investments. Companies that have already made significant AI investments without commensurate returns may adopt more conservative technology purchasing approaches in subsequent budget cycles.

requires ongoing monitoring. While Luria views AI-native competitors as manageable threats given the switching costs and integration complexity inherent in enterprise software, the possibility of rapid disruption cannot be entirely dismissed. RBC Capital’s skepticism regarding AI software valuations, exemplified by its $50 price target on Palantir representing 74% potential downside from current levels, reflects meaningful concerns about sustainable business models [7].

remains present if software company growth fails to accelerate commensurate with AI investments. The sector’s current depressed valuations partly reflect investor uncertainty about future growth trajectories, and continued underperformance could trigger additional multiple compression.

presents potential opportunity as defensive sector outperformance historically precedes periods of renewed growth sector leadership. The current rotation away from mega-cap technology names may create entry points for investors positioning ahead of a sector recovery.

across recommended software stocks provides meaningful margin of safety. Luria’s $220 target on CVLT, combined with the stock’s current trading 24% below its 200-day moving average, creates a favorable risk-reward profile if execution concerns prove temporary [2].

could surprise to the upside if enterprise adoption of AI-enhanced software accelerates beyond current expectations. Companies successfully monetizing AI features may experience renewed investor interest and multiple expansion.

This analysis synthesizes perspectives from multiple sources including Gil Luria’s CNBC appearance [1], supporting analyst commentary from Yahoo Finance and other financial outlets [2][6], market data from the Ginlix Analytical Database [0], and news reports regarding sector-specific developments [3][4][5].

The technology sector’s -0.85% daily decline on January 14, 2026, represents the immediate market context for Luria’s bullish software thesis [0]. The sell-off has created meaningful discounts across quality software names, with CVLT trading 24% below its 200-day moving average and carrying analyst price targets implying 50%+ upside potential [0][2]. However, the timing of any sector recovery remains uncertain, and investors should carefully evaluate company-specific fundamentals and AI monetization progress when considering positions in the software space.

Key metrics to monitor include Q1 2026 enterprise software earnings particularly regarding AI revenue contribution percentages, Federal Reserve guidance affecting growth stock valuations, major platform announcements related to agentic AI developments, customer adoption metrics including renewal rates and expansion revenue for AI-enhanced products, and memory and semiconductor sector trends which Luria has identified as potentially providing timing clues for broader tech sector rotation [8].