Bottom line: Rising uncertainty about which software products may become obsolete through AI is leading to a decline in corporate acquisitions in the software sector.
Acquisition activity in the software sector is falling to its lowest level in four years. Investors are holding back amid uncertainty about which software functions could be replaced by AI systems.
The market for software company acquisitions is in a phase of restraint. Transaction volumes are falling to the lowest level since 2020 — a direct indicator of the caution with which investors are approaching the sector.
The reason lies in fundamental uncertainty about the future of software functions and entire product categories. With the rise of generative AI models, investors face the question of which software tools and modules could be functionally replaced or rendered obsolete by artificial intelligence in the foreseeable future. This uncertainty directly impacts the valuation of acquisition targets.
For Chief Digital Officers, this creates a dual implication: on the one hand, decision-makers should place greater weight in make-or-buy analyses on evaluating which software additions actually provide long-term competitive advantages or could be quickly neutralized by AI automation. On the other hand, lower valuations in the M&A market can also represent an entry window for strategic acquisitions of undervalued assets, provided it is clear that the software in question still has a place in the AI era.
Source: www.golem.de · Published June 9, 2026
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