3 Software Stocks Rebounding as AI Fears Give Way to Growth

Key Points

• Atlassian, Salesforce, and Dynatrace were all hit by fears that AI could erode demand for traditional software, but each has staged a sharp rebound in 2026.
• Fresh results suggest enterprise AI adoption may be creating new demand for collaboration, CRM, and observability tools rather than simply replacing them.
• Rovo adoption, Claudeforce monetization, and Dynatrace’s net revenue retention will help show whether those rebounds are backed by durable growth.

Early in 2026, markets saw software stocks as among the biggest losers from AI adoption. The advent of “vibe coding" largely drove this, as it significantly increased software development productivity. This led to fears that traditional software companies would face intense competition going forward, eroding their businesses.

While this claim is neither entirely correct nor entirely incorrect, many key software companies are demonstrating their ability to benefit from enterprise AI adoption rather than suffer from it. Several have rebounded sharply as investors reassess those risks.

Atlassian Rises From the Ashes

Productivity software company Atlassian NASDAQ: TEAM has arguably seen the most dramatic shift in sentiment among any software stock in the market. Notably, through mid-April 2026, shares were down more than 60% year-to-date (YTD).

One factor behind this was the idea that AI coding tools would reduce employment among software engineers. This could hurt demand for Atlassian’s key products, like Jira, which helps manage software development and charges based on the number of licenses a company buys.

However, it seems that AI adoption is actually increasing the demand for Atlassian’s products as companies need more help coordinating across teams to implement AI. In its latest quarter, the company signed a record number of $1 million, $3 million, and $5 million deals.

Its Rovo AI assistant is also gaining significant traction. The company notes that over 80% of Fortune 500 companies use Rovo. Additionally, Rovo-assisted actions increased by 50% in just one quarter, and Rovo adopters increased their annual recurring revenue (ARR) commitments more than twice as fast as non-Rovo adopters. Amid this success, shares have rebounded sharply from their spring lows.

Salesforce New Order Value Growth Hits 4-Year High

The tide has also turned in a big way for software giant Salesforce NYSE: CRM. Through June 2026, Salesforce shares were down by approximately 40%, driven by fears that AI would disrupt its seat-based model. However, Salesforce’s latest earnings strongly pushed back against this idea, and shares have recovered much of their earlier 2026 losses.

Last quarter, the company noted that its net new annual order value (NNAOV) growth is now its strongest in four years. NNAOV measures the annual contract value from customers who entered subscriptions during the period. Thus, the company is saying that the size of new commitments is rising at a pace not seen in years. This contradicts the idea that AI would hurt demand for Salesforce’s products.

Meanwhile, the company is finding ways to drive AI growth. Notably, its Agentforce offering saw ARR hit $1.5 billion last quarter, up 240% year-over-year (YOY). The company also announced Claudeforce, its product collaboration with Anthropic, indicating that AI models and Salesforce's products can be complementary.

Dynatrace Is Winning on AI Observability Demand

Last up is Dynatrace NYSE: DT. The stock fell considerably less than TEAM and CRM earlier in 2026, being down around 25% through mid-April. However, shares have rallied sharply from their mid-April lows.

Dynatrace is a key player in the observability market, which is rapidly expanding as enterprises implement AI. Using AI agents means that enterprises must be able to monitor and correct their performance; a need that Dynatrace’s observability platform addresses. Dynatrace says that 1,000 customers used its platform to observe AI and LLM workloads in production last quarter, up 17.6% in one quarter.

Amid this, the company achieved record new customer growth, also called logo growth, of 160% last quarter. Looking ahead, Dynatrace expects the AI observability market to exceed $10 billion by 2030, growing by more than 50% annually. This is just a portion of the $92 billion total addressable market Dynatrace sees, which includes core observability and application security.

Watch Items Across Atlassian, Salesforce, and Dynatrace

Increased adoption of Rovo will be an important indicator for Atlassian going forward. Given that Rovo adopters are increasing their spending twice as fast as non-adopters, this would reflect favorably on Atlassian’s future growth potential.

For Salesforce, a key watch item will be how Claudeforce adoption affects the company’s growth, as it is unclear how Salesforce and Anthropic share the resulting revenue. If users grow strongly but Salesforce’s revenue receives a limited uplift, it would suggest that Anthropic is benefiting disproportionately.

Dynatrace’s net revenue retention rate (NRR) is another key metric to watch. It stood at 110% last quarter, meaning existing customers spent 10% more year over year. Management expects NRR to improve in the second half of fiscal year 2027. If it does, that would signal stronger expansion among existing customers as Dynatrace capitalizes on rising AI observability demand.