A lot of software companies won’t ‘thrive or survive’: Analyst

Yahoo Finance Video and Julie Hyman

Wed, February 18, 2026 at 4:30 AM GMT+9

In this video:

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As Wall Street’s AI concerns continue to creep through the software sector on Tuesday, Vice Chair at Citizens Commercial Bank, Mark Lehmann, discusses the valuations of software companies as they navigate the recent tech sell-off.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief.

Video Transcript

00:00 Julie

Let’s take the investing side of this because of course that’s the other thing that people have to be aware of here. You know, where are their opportunities from that perspective, not just like how am I going to save my job, but how maybe can I invest intelligently in this whole theme. And once again, I’m going to pull up the the Wi-Fi interactive and I’ve got a board of software stocks. And I don’t have to tell you what this looks like. It looks ugly, right?

00:23 Julie

Uh Microsoft down 17% just this year, Oracle down, Palantir down 26%, although obviously from from big highs in many of these cases, Shopify down 30%. So if I’m an investor, um and you know, you’re having, you have the benefit of conversations that you’re having um with businesses that are in technology. How do I know where to pick up things on this board or on any kind of of tech board right now?

00:55 Speaker B

Uh, it’s hard. Um, I think some of those, like you said, were company specific. Palantir had an extraordinary 24 and 25 and obviously, uh the bigger they are, the harder they fall. I think you could say the somewhat the same thing about Oracle. Oracle got so much buzz at the end of last year when they started to get in to the, uh, the markets that they frankly hadn’t played in before with data centers and others. And they went up extraordinarily high, probably got ahead of themselves.

01:21 Speaker B

So the issue is, are there people who with AI are going to be beneficiaries of that. We have a Paul Wal Ribbons or research analyst spends a lot of time on that with his team trying to figure that out. We’ve been very um, specific about this. Let’s let’s step back.

01:46 Speaker B

Software stocks over the course of the last 30 years, at their absolute summit have traded at 20 times revenue. At their absolute trough, they’ve traded two and a half times revenue. They’re trading three plus times revenue right now. They’ve gone down an extraordinary amount. Does that mean they’re all buys? It obviously does not. But we’re picking some names. We like Oracle, we like Digital Ocean. Uh, we have a conference in two weeks in technology in San Francisco where many of these companies are going to be speaking and they’re going to be speaking specifically about this issue. It’s a great time

02:20 Speaker B

for people to really attend these meetings. You’re going to be able to listen to the company’s commentary. There’ll be lots of transcriptions available on public websites. Use those to your benefit. But a lot of these companies, I’m going to say it again, will not thrive or survive. And we saw the same thing happen in these last couple cycles, that would be same case. But what this is what happened 20 years later, Microsoft traded flat for about 15 years from '97 to 2012 or '13.

02:54 Speaker B

Microsoft did not go up at all. And in the last decade because of what happened in the cloud, the stock has done what it has done. Microsoft reinvented itself. Apple reinvented itself.

03:07 Speaker B

To some extent, those are the only two companies that I’ve seen truly reinvent themselves.

03:13 Speaker B

You’re going to see some companies have to reinvent themselves now. Oracle has sort of reinvented themselves in a big way and then came back. That’s what’s going to happen, Julie, in the next few years.

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