Why INTU, ADBE, TTD, WDAY and CRM lag the S&P 500

The S&P 500 has climbed about 21% over the past 12 months and is roughly 7% higher year-to-date. Major enterprise software names have moved in the opposite direction: Intuit, Adobe, The Trade Desk, Workday and Salesforce trade well below their all-time highs.

Intuit shares have fallen about 67% from a July peak last year. The Trade Desk is down roughly 87% from its record level. Adobe shares have slid more than 70% from their highs and recently traded near $196. Salesforce has declined about 57% from its peak. Other software firms, including ServiceNow, Palantir, Autodesk, AppLovin and Veeva, have also retreated. The iShares Expanded Tech-Software Sector ETF (IGV) has dropped for four straight weeks and sits roughly 27% below its record high.

Investors have concentrated gains in companies tied to artificial intelligence and the hardware that supports it, while large enterprise software stocks have lagged. Market participants point to two main factors behind the weakness: concern that generative AI and new developer toolkits could automate or replace current software functions, and a valuation reset after years of high price multiples.

AI products from startups and major tech firms have raised questions about which software features will remain important and which could be automated. That concern has been labeled by some market observers as the “SaaSPocalypse,” meaning the risk that AI agents or assistants could reduce demand for certain existing software offerings.

Several large software vendors have responded by adding AI capabilities to their products. Salesforce introduced Agentforce, designed to build and deploy autonomous agents for sales, service, marketing and commerce tasks. Intuit launched Intuit Assist, an AI financial assistant aimed at automating accounting and tax workflows. Workday rolled out Workday Illuminate for HR, finance and planning. ServiceNow, The Trade Desk and Figma have announced AI-focused integrations as well.

Those product launches have not translated into faster revenue growth for many firms. Analyst forecasts cited by market participants project Adobe revenue growth near 11% this year and about 8% next year. Workday revenue is expected to rise roughly 11.6% this year and about 10% in the following year. Forecasts for other long-established software vendors point to single-digit or low-double-digit growth.

Private-market outcomes have reflected lower valuations. Thoma Bravo paid about $6.4 billion for Medallia in 2021; the company later saw its equity position eroded as creditors took control. Pluralsight was acquired by Vista Equity Partners and the business subsequently faced a write-down estimated at around $3 billion. Those developments have influenced how investors value software assets.

Forward price-to-earnings multiples have fallen for many names: Adobe near 8, Workday and Salesforce around 10, and The Trade Desk about 9. Market participants say any broad recovery in these software leaders could depend on a wider rotation out of semiconductor and memory stocks that have benefited from the AI hardware rally.