The Nasdaq is down 5 weeks in a row. Software stocks are down 20-50%. Are any of these actually cheap yet?
Original source ↗  |  February 17, 2026 at 15:31 UTC  |  Reddit — r/ValueInvesting
Speakers
u/Yaashicca

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.

=== SENTIMENT === MIXED

Trade Ideas
Ticker Direction Speaker Thesis Time
APP
WATCH u/Yaashicca 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. —
PLTR
AVOID u/Yaashicca 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. —
SOFTWARE SECTOR (GENERAL)
AVOID u/Yaashicca The potential for AI agents to disrupt the core seat-based SaaS business model warrants avoiding the broader software sector until the impact of this disruption becomes clearer. The Nasdaq is down 5 weeks in a row, software stocks are down 20-50%, and the author highlights the bear case of AI agents disrupting the SaaS pricing model. This isn't just a valuation reset but a potential business model threat, suggesting fundamental risks that outweigh current multiple compression for many companies in the sector. It may be prudent to avoid the entire software sector until there is more clarity on how the AI disruption will play out and which business models will adapt or fail. Missing out on a potential rebound if the AI disruption is overstated, takes longer to materialize, or if certain companies within the sector prove resilient and innovative in adapting to AI. —