The bloodletting in enterprise software has stopped. Markets spent eighteen months pricing in the total obsolescence of the seat-based license. They were wrong. The narrative was simple, perhaps too simple. Generative AI would kill the software-as-a-service model. Coding would be free. Seats would be redundant. The algorithm would replace the analyst. This week, the architects of the cloud began fighting back.
The AWS Rebuttal
Matt Garman, CEO of Amazon Web Services, issued a sharp correction to the prevailing market gloom. He characterized the massive selloff in software stocks as overblown. The logic is technical. While retail investors feared that AI would cannibalize existing software spend, the reality on the ground suggests a massive expansion of the total addressable market. AWS is not seeing a retreat. It is seeing a re-architecture. Companies are not cutting software to pay for GPUs. They are buying more software to manage those GPUs. Per recent Reuters technology reporting, the infrastructure layer is now acting as a leading indicator for a software recovery that the public markets have yet to fully digest.
Performance Variance: Cloud Giants vs. Benchmark (YTD February 12, 2026)
The Seat Count Fallacy
The market’s obsession with seat counts is a relic of the 2010s. Modern enterprise software is moving toward agentic workflows. Salesforce ($CRM) and Adobe ($ADBE) are the primary battlegrounds for this shift. If an AI agent can do the work of five junior analysts, the company doesn’t just delete five licenses. It buys an enterprise-grade orchestration layer to manage that agent. This is the pivot that the bears missed. Salesforce has aggressively integrated its Agentforce platform, moving the monetization model from human logins to conversation volumes. Adobe has done the same with its Firefly integration, effectively locking in creative workflows before open-source models could disrupt them. According to data available via Bloomberg Markets, institutional accumulation in these names has quietly ticked upward since the start of the month.
Valuation Metrics and AI Revenue Contribution
The following table breaks down the current fundamental standing of the three major players mentioned in the recent AWS report. The divergence in Forward P/E ratios suggests that the market is still picking winners and losers with high volatility.
| Ticker | Forward P/E Ratio | Est. AI Revenue Contribution | Q4 Revenue Growth (YoY) |
|---|---|---|---|
| AMZN | 38.5 | 18% | 14.2% |
| CRM | 24.1 | 9% | 11.5% |
| ADBE | 26.8 | 14% | 10.8% |
Technical Resistance and Institutional Flows
The charts tell a story of capitulation followed by a slow, grinding recovery. Amazon ($AMZN) has led the pack, largely because it owns the shovels in this gold mine. However, the laggards like Salesforce are showing signs of a bottom. Short interest in the software sector reached a three-year high in late January. That trade is now crowded. Any positive catalyst, such as the AWS CEO’s comments, triggers a violent short covering rally. We are seeing the ‘AI Fear’ discount evaporate in real-time. Investors who sold the software dip to chase hardware hype are finding themselves trapped in overextended semiconductor positions while the software layer begins to catch up. Detailed SEC filings from the last quarter indicate that top-tier hedge funds are rotating back into high-margin SaaS names that show clear ‘Agentic’ roadmaps.
The next major data point to watch is the February 25 NVIDIA earnings call. While that is a hardware event, the commentary regarding enterprise software deployment will be the final confirmation the market needs. If Jensen Huang confirms that the ‘sovereign AI’ and ‘enterprise agent’ wave is accelerating, the current software rally will transform from a relief bounce into a structural bull market. Watch the 10-year Treasury yield. If it stays below 4.2 percent, the valuation expansion for these software giants has significant room to run.
