Who are the winners and losers in the "software panic sell-off"? Wedbush and Goldman Sachs provide some answers.

Amid the rapid development of artificial intelligence, market fears of “AI replacement” have emerged, leading to significant sell-offs in the U.S. software sector recently. In this context, besides key software stocks, Goldman Sachs has named alternative asset management firms and direct lending institutions as also impacted. However, some experts, including Wall Street investment bank Wedbush analyst, still see investment opportunities.

Dan Ives, head of global technology research at Wedbush Securities, said this year will be Apple’s (AAPL.US) breakout year. In an interview, Ives predicted that artificial intelligence could increase the company’s per-share valuation by “$75 to $100,” dismissing concerns about European regulators and noting that Apple has taken a proactive strategic stance in consumer AI. He compared this situation to Alphabet’s (GOOGL.US) strong performance last year.

Jeff Kilburg, founder, CEO, and chief investment officer of KKM Financial, pointed out that investors have been selling previous winners like Nvidia (NVDA.US) and Meta (META.US), and shifting into laggards like Apple and Alphabet, which offered buying opportunities during the low period around last April’s tariff announcement.

Kilburg is particularly optimistic about Alphabet’s growth prospects, noting that the company’s revenue has surpassed $400 billion for the first time. He also highlighted the efficiency improvements of Google’s Gemini platform, which now processes 10 billion tokens per minute, with service costs down 78% in a year.

Despite Ives calling it the “software apocalypse” and a broad industry sell-off, both analysts see opportunities amid the turmoil.

Ives described the current moment as a “table-pounding” opportunity to buy oversold stocks like Salesforce (CRM.US), CrowdStrike (CRWD.US), Microsoft (MSFT.US), Oracle (ORCL.US), and ServiceNow (NOW.US). He said, “We will look back at this as an excellent time to buy stocks I believe have been heavily sold off.”

The analysts also discussed volatility in the cryptocurrency market. Kilburg compared MicroStrategy (MSTR.US) to “a falling knife,” as the stock has dropped 72% from its all-time high. Kilburg said, “Cryptocurrencies are generally going through a testing period,” and noted that during tough times, cryptocurrencies “become overly indifferent and diverge from overall global macro sentiment.”

However, despite turbulence in the tech and crypto markets, both analysts remain long-term optimistic. Ives described the sell-off as a “digestive phase,” not a fundamental shift. He emphasized, “This is not the end,” and the current indiscriminate sell-off presents significant opportunities for investors willing to tolerate market fluctuations.

Meanwhile, Goldman Sachs analyst Alexander Blostein and his team stated earlier this week that concerns over AI risks to the software industry persist, putting pressure on alternative asset management firms and direct lenders.

Over the past month, VanEck’s alternative asset management ETF (GPZ) has fallen 14%, while the S&P 500 index declined only 0.8%. At the same time, VanEck BDC Income ETF (BIZD) dropped 7.8% over the past month.

Blostein and colleagues wrote in a client report, “The sharp sell-off in alternative asset managers is mainly due to investor concerns about their exposure to software in private equity and private credit businesses, and the potential growth impact if investment performance deteriorates.”

Although data is limited, especially in private equity, Goldman Sachs’ preliminary assessment indicates that the software exposure at the enterprise level for alternative asset managers is “relatively small,” accounting for about 5% of total management fees in private equity software. They also noted that the software management fees from private credit/direct lending are similarly proportioned.

Of course, there are differences among firms. TPG (TPG.US) and KKR (KKR.US) have relatively higher shares in private equity, with management fees in the software sector reaching single-digit percentages. Blue Owl (OWL.US) and Ares Management (ARES.US) have higher exposure in private credit, accounting for 13% and 8% of management fees, respectively.

Goldman Sachs analysts estimate that Carlyle Group (CG.US), Apollo Global Management (APO.US), and Brookfield Asset Management (BAM.US) have the smallest risk exposure to software investments.