Software stocks just suffered their worst relative selloff on record, but Goldman Sachs says investor fear around artificial intelligence disruption has gone too far, creating rare opportunities in four deeply discounted names.

The iShares Expanded Tech-Software Sector ETF (NYSE:IGV)) has fallen for four straight weeks, declining roughly 22%, its worst four-week stretch since the pandemic.

Relative to the S&P 500 ETF, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), the drawdown is even more striking: a 21% underperformance, the worst ever for software, exceeding the dot-com bust, the Global Financial Crisis and the 2022 rate-hike shock.

"The recent selloff in software reflects a rapid shift in investor sentiment rather than a sudden deterioration in fundamentals," Goldman Sachs analyst Matthew Martino said on Monday.

Chart: Software Sector Suffers Worst Relative Slump On Record

Why Market Panic In Software Could Be A Buying Window

Goldman Sachs said announcements such as Claude Cowork and OpenAI's Frontier have fueled fears that horizontal AI layers could replace traditional platforms.

That narrative has compressed multiples broadly and indiscriminately, even for companies with strong data, infrastructure and mission‑critical roles.

Goldman's portfolio strategy team found that current ...