Software Has Evolved Through Prior Dislocations | Vista 2026 Outlook Report

• Public software markets have experienced dislocations during prior technology transition periods.

• Since 2014, the software sector has experienced nine downturns of meaningful magnitude. Today’s compression, while significant, falls within the historical range of prior transitions.

• A notable example was 2014–20, when SaaS valuation multiples compressed as investors asked whether cloud platforms like Amazon Web Services would displace traditional software vendors. What followed was a decade-long expansion.

• Ultimately, enterprises didn’t abandon their software, they consumed more of it. Cloud infrastructure made software faster to deploy, easier to scale and more deeply embedded in business operations. The pie grew larger for everyone.

• We see a similar dynamic at work today. The concerns shaping the current narrative — AI native disruption, changing revenue models and uncertainty around enterprise adoption — are not irrational. But they are getting ahead of the evidence. Importantly, approximately 96% of software companies are private.

• Public equity indices therefore capture only a fraction of the sector’s activity, and we believe the companies driving the most significant Agentic AI innovation today are largely outside public view.