The Nasdaq is down 5 weeks in a row. Software stocks are down 20-50%. Are any of these actually cheap yet?
u/Yaashicca ·
Reddit — r/ValueInvesting
· February 17, 2026 at 15:31
· ⬆ 160 pts
· 💬 152 comments
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Summary
The post discusses the recent significant downturn in the Nasdaq and specific software stocks (down 20-50%), questioning whether current price drops represent emerging value or a deeper structural issue.
The author explores the tension between multiple compression creating opportunity for "real businesses" and the bear case of AI agents fundamentally disrupting the seat-based SaaS business model.
The core thesis is an inquiry into when beaten-down software names become value plays, or if avoiding the sector due to AI disruption risk is the more prudent move.
Quality assessment: This is a well-structured inquiry, presenting observable market data, specific stock performance, and articulating both bull and bear cases for the software sector. It's a thoughtful piece of speculation rather than deep fundamental DD or noise.
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Trying to figure out if theres actual value emerging in tech or if this is still a falling knife situation.
The damage so far:
\- Oracle: down 50% from October highs
\- ServiceNow: down 40%
\- AppLovin: down 40%
\- Palantir: down 23% YTD (despite beating earnings 13 quarters in a row)
\- Salesforce: down 26%
\- Software ETF (IGV): down 20% YTD
Today the Nasdaq dropped another 1%. Fifth straight week of declines. Longest losing streak since 2022.
S&P broke below its 100-day moving average. Software ETF down 2.4%. Even chip stocks fell 2.1%.
The bull case: these are real businesses with real revenue thats still growing. Multiple compression creates opportunity if the underlying business is intact.
The bear case: AI agents might actually disrupt the seat-based SaaS model. If an AI can do what a $150/month/user software subscription does, the whole pricing model is broken. This isn't a valuation reset — its a business model threat.
Some quick valuations:
\- Palantir: still trading at 97x forward earnings even after the drop
\- AppLovin: 25x forward (actually getting interesting?)
\- Salesforce: 23x forward
\- ServiceNow: 45x forward
For comparison, the market is paying 35% YTD premiums for AI infrastructure plays like Vertiv (makes data center cooling). The rotation is real.
My question for this sub: at what point do beaten down software names become value plays? Or is the right move to avoid the whole sector until we see how the AI disruption actually plays out?
Not looking for stock picks — just trying to understand how you're thinking about this.
AppLovin's valuation is becoming "interesting" after a significant price drop, potentially signaling an emerging value play. AppLovin is down 40% from its highs and is now trading at 25x forward earnings. This valuation is significantly lower than many peers (e.g., Palantir at 97x, ServiceNow at 45x) and is explicitly flagged by the author as "actually getting interesting?". The stock's multiple compression makes it a candidate for further investigation as a potential value investment. The broader sector faces potential disruption from AI agents, and it could be a "falling knife" if the market continues to decline or if the underlying business model is fundamentally threatened.
Despite a significant price drop, Palantir's valuation remains too high for a value-oriented investor. Palantir is down 23% YTD but is still trading at 97x forward earnings. This high multiple, even after a decline, indicates that the stock is not "cheap" by traditional value investing metrics, especially compared to other software names. Palantir does not currently represent a value play due to its elevated valuation multiple. Missing out on potential future growth if the company's AI initiatives prove highly successful and justify a premium, or if market sentiment shifts to favor high-growth, high-multiple stocks.
This Reddit post, published February 17, 2026,
features u/Yaashicca
discussing APP, PLTR.
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