U.S. software stocks dropped 28% since October as AI fears grew, prompting record buybacks but leaving investors uncertain about recovery.

U.S. software stocks fell 28% since late October amid fears AI could disrupt business models, prompting companies to authorize $70.5 billion in buybacks since January 12—nearly four times last year’s level. Major firms like Salesforce and ServiceNow boosted repurchases, but investors remain skeptical, citing ongoing uncertainty about AI’s impact. Valuations dropped to 22 times forward earnings by late February, down from 32 in October, with analysts stressing that sustained performance, not buybacks alone, will determine recovery.