Is AI Really Eating Software? A Wall Street Veteran Says No—Here’s Why

Software has been the market’s favorite growth story for more than a decade. But lately, it’s been the market’s punching bag.

In a recent MarketBeat conversation, Chaikin Analytics founder Marc Chaikin explained why he thinks the software selloff isn’t just a quick shakeout and why investors should be careful trying to “buy the dip” too early. His message was simple: even if the biggest software platforms survive, the market may no longer reward them with the same premium valuations.

At the same time, Chaikin argues the AI boom is still alive and well. It’s just pulling money toward the parts of tech that make AI run, not necessarily the software apps investors are used to chasing.

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Why Software Is Getting Hit

Chaikin traced the anxiety back to a big shift in perception.

For years, the “software is eating the world” idea held up because SaaS companies built sticky products, scaled quickly, and generated strong margins. Now, tools like ChatGPT and Claude have investors thinking: What if more software becomes easier to replicate than we assumed?

That fear doesn’t mean major software companies are going away. Chaikin actually believes the biggest, most entrenched platforms, those with large installed bases embedded into business workflows, are more likely to survive. But survival doesn’t automatically equal strong stock performance.

The bigger question, in his view, is what investors will pay for those businesses going forward if growth expectations cool and competition becomes easier to create.

Would He Buy Software on This Dip?

Not yet.

Chaikin compared buying software right now to “catching the javelin.” Yes, he believes a recovery is possible eventually. But he thinks it’s too early for investors to confidently identify the winners, the losers, and how much the AI threat will reshape pricing power.

His stance: wait for the market to stabilize, let analysts dig into the fundamentals, and don’t assume a sharp rebound happens quickly just because prices have fallen.

Where the Momentum Has Rotated Instead

If software is under pressure, where is the strength?

Chaikin says the AI boom is still being fueled by data centers, and data centers require chips. But chips have one big vulnerability: failure. Heat and stress can knock them out, and the cost of downtime is enormous.

That’s why Chaikin is focused on nuts-and-bolts tech: companies tied to chip reliability, testing, packaging, and the energy infrastructure that supports the entire buildout.

Here are the three names he highlighted.

1. Onto Innovation: A “Quality Control” AI Play

Onto Innovation NYSE: ONTO is Chaikin’s favorite tech name right now because it offers a straightforward way to participate in the AI buildout without relying on a software narrative.

The company makes tools and systems that help test and verify chip reliability. In a market sprinting to build more data centers, reliability becomes a must-have, not a nice-to-have.

Chaikin also likes its profile as a mid-cap stock, a size range he believes is currently offering better opportunity than mega-cap tech, while still avoiding some of the shakier fundamentals often seen in small caps.

From a chart perspective, he described ONTO as a strong uptrend name that has been volatile enough to offer second-chance entries. His preference isn’t to chase a double top; he’s watching for a pullback.

2. Amkor Technology: Testing and Packaging Exposure

Amkor Technology NASDAQ: AMKR sits in a similar neighborhood, but with a slightly different mix.

In addition to test services, Amkor also handles outsourced semiconductor packaging, another critical piece of the chip supply chain as demand ramps.

Chaikin noted the sector-wide surge that followed strong results from Taiwan Semiconductor Manufacturing Company NYSE: TSM, as many chip-related names moved together. What he liked about Amkor is that after the spike-and-pullback, the stock rallied back toward those prior highs, suggesting demand and accumulation may be more durable than a one-day headline reaction.

His bigger point: the semiconductor group is behaving like the opposite of software right now. Instead of breaking down, it’s showing broad strength, helped by strong industry fundamentals.

3. Enphase: A Turnaround With a Data Center Energy Angle

Enphase NASDAQ: ENPH is the most “different” pick on the list, and Chaikin admitted it.

He typically avoids turnarounds in tech. But he’s watching Enphase because energy demand is becoming a bigger part of the AI story. As data centers expand, power costs and alternative energy options matter more, and that creates potential for new markets.

What changed for him wasn’t just the narrative. It was the stock’s behavior. Enphase had bullish indicators for a while, but wasn’t outperforming the broader market. Recently, relative strength improved, and a screening program flagged it as a “strong stock in a strong group.”

The stock also reacted sharply after earnings, then began to cool off and consolidate, often the kind of setup technical investor look for when a new uptrend is forming without being at an all-time high.

The Takeaway

Chaikin’s view isn’t that tech is dead. It’s that leadership is changing.

Software may still have winners, but he’s not trying to call the bottom yet. Instead, he’s following the money into the infrastructure behind AI: chip reliability, testing, packaging, and power.

In a market defined by rotation, his approach is simple: stay out of the javelin-catching trades, and focus on the charts and sectors that are still acting like leaders.

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