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July 26, 2026
Partner, Chief Economist
The recent performance of US software indices reveals a stark divergence in market expectations regarding the disruptive threat of AI, see chart below.
High-level groupings seen as AI-immune, such as security software and infrastructure software, have significantly outperformed the broad benchmark because they provide the critical data backbones, compute pipelines and complex protection systems that generative models actively expand rather than displace.
Conversely, categories deemed AI-vulnerable, specifically application software and vertical software, are severely lagging behind as investors price in potential disintermediation, lower switching costs and reduced seat-based licensing demand driven by automated AI workflows.
The bottom line is that the market is clearly favoring foundational security and infrastructure layers over legacy applications as artificial intelligence reshapes software business models.
Sources: J.P. Morgan iDex Indices, Bloomberg, Macrobond, Apollo Chief Economist
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