AI isn’t eating software after all — and the sector’s ‘epic’ rally could run through October

For much of 2025, software investors braced for a reckoning. The prevailing fear was that generative AI would upend the subscription model, as enterprises replaced traditional applications with AI-native workflows. But the latest round of quarterly earnings has softened that narrative. Across the sector, companies have reported resilient demand, suggesting that AI is augmenting software rather than cannibalizing it.

The shift in sentiment has fueled what some describe as an "epic" rally in software stocks, and momentum could persist into October. The key watch item is management commentary on AI monetization — specifically, how vendors translate new feature adoption into billings and retention. The consensus is still forming; the central uncertainty is whether this optimism rests on durable fundamentals or is simply a sentiment-driven snapback after months of pessimism.