Software stocks are already hurting because of the impacts of AI, and there could be a lot more pain for them in the offing.
That warning comes from Klarna CEO Sebastian Siemiatkowski, who has been one of the most vocal executives on how AI is fundamentally reshaping the economics of the tech industry. Siemiatkowski — whose company has itself been an aggressive AI adopter — made the remarks in a recent interview, and the numbers he laid out make for sobering reading for anyone holding software stocks.
“If you look at historically, software could trade at a price to sales — I’m not going to talk price to earnings because some of them aren’t profitable, so it’s not an easy way to compare — but if you do price to sales, they’ve been trading at 20, 30, and now they’re down at five, 10,” Siemiatkowski said. “But if you look at utilities, normal companies that are more utility-like, they may trade at one to two.”
The implication is stark: software companies, long valued at a massive premium to the rest of the market on the assumption that they are high-growth, high-margin businesses, may be in the early stages of a long re-rating toward the kinds of multiples reserved for slow, stable, commoditised industries.
Siemiatkowski pointed to Chegg as a cautionary tale of what that can look like in practice. “From that perspective, you would argue there is still some unfortunate potential to come down even further. Look at Chegg in the US — they’re now trading at 0.2. ChatGPT was seen as basically wiping out their business a few years ago, and now they’re trading at a depressed value. And now the revenue’s also coming down, actually 30, 40% last time I checked.”
He was careful, however, not to predict doom across the board. “Is that going to happen? I don’t think so. That’s probably too extreme. 0.2 would be very extreme for some of these companies — but is it likely they could come down to one or two? Yes, I think so.”
The broader picture Siemiatkowski is painting is one where AI gradually erodes the moats that allowed software companies to command outsized valuations in the first place. If AI can replicate or replace the core functionality of many software products at a fraction of the cost, the pricing power and growth premiums that justified multiples of 20x or 30x price-to-sales simply evaporate. What remains is a business that looks more like a utility than a technology disruptor — and the market will price it accordingly.
The irony is that Klarna itself illustrates the complexity of this dynamic. The company has moved faster than almost any other on AI adoption: it stopped hiring humans over a year ago as a direct result of the technology, and made global headlines when it revealed its AI assistant was doing the work of 700 human employees. Yet despite being an AI front-runner, Klarna’s own stock (NYSE: KLAR) has struggled badly since its public listing, falling nearly 70% from its all-time high of $42.92 in September 2025 to around $13 as of late February 2026.
It is a reminder that being a savvy adopter of AI does not necessarily insulate a company from the market-wide repricing that Siemiatkowski himself is warning about — and that the disruption he describes may be indiscriminate in who it hits.