Navigating Market Volatility in Technology: A Perspective on AI-Driven

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22 May 2026

In recent months, technology and software markets have experienced heightened turbulence, with valuations swinging sharply despite solid underlying fundamentals. Concerns over artificial intelligence (AI) and its disruptive potential have triggered a broad reassessment of traditional software business models, leading to substantial market repricing. As investors seek clarity amid uncertainty, Tiera Capital offers its perspective on the structural strengths of the sector and the long-term opportunities that lie ahead.

AI anxiety drives market reassessment

Since late last year, even the most established enterprise software leaders, including Microsoft, SAP, Salesforce and Workday, have seen significant share price declines. This broad-based selling has reached nearly every major software sub-sector. Notably, this correction has unfolded without an accompanying deterioration in operating performance. Instead, markets are adjusting to a new paradigm: the possibility that AI could shift value creation away from traditional software and towards new generative technologies.

Durable competitive moats: a source of stability

Across the software landscape, companies with deep and defensible competitive advantages continue to demonstrate remarkable resilience. These businesses function as essential infrastructure within their sectors and possess characteristics that remain highly relevant during periods of disruption:

Strong vertical expertise and complexity: industry-specific capabilities, regulatory requirements and localised workflows create meaningful barriers to entry.
Deeply embedded systems: core business processes rely on proprietary and historical data, where reliability is critical and errors cannot be tolerated.
Long-standing customer relationships: high switching costs and low churn reflect years of trust, integration and operational familiarity.

These strengths are especially pronounced within vertical software-as-a-service (SaaS), where domain expertise and close customer alignment reduce exposure to broad, generic AI-driven disruption.

AI as a growth engine, not a threat

While AI has raised questions about future business models, it also represents one of the most significant innovation catalysts in decades. Across the Tiera Capital portfolio, many software companies serving SMEs and mid-market clients are accelerating their adoption of AI. With smaller firms often constrained by limited IT budgets, they rely heavily on incumbent vendors to deliver AI-enabled productivity gains.

This evolution opens the door to:

Enhanced product functionality
New upselling and cross-sell opportunities
Evolving pricing models, including usage-based and outcome-based frameworks
Expansion of addressable problem sets that software can solve

Structural strengths support long-term opportunity

Despite short-term valuation compression, the software sector retains deep structural strengths: robust support models, embedded security and compliance frameworks, and the essential accountability that businesses expect from trusted technology providers. Migrating away from established platforms remains complex, risky and resource-intensive, strengthening the position of companies with entrenched customer bases.

Historically, markets have tended to overestimate the short-term impact of transformative technologies and underestimate their long-term benefits. Most technological shifts unfold not through abrupt displacement but through gradual augmentation, precisely the dynamic now unfolding with AI.

Periods of compression that occur without any deterioration in fundamentals have, time and again, provided attractive entry points for long-term investors. Durable franchises with strong cash generation, deep customer intimacy and strategic relevance are well placed to benefit from recovery, consolidation and renewed innovation cycles.

Looking ahead: Tiera Capital’s commitment

As technological change accelerates, Tiera Capital’s investment team continues to monitor developments with vigilance and discipline. The Investment Committee maintains oversight of both opportunities and risks across the sector, ensuring that investment decisions remain prudent and aligned with clients’ long-term interests.

Our experts are confident that software companies with established barriers to entry, deeply embedded systems and a proactive embrace of AI will emerge stronger from today’s period of volatility. These businesses are poised to weather short-term uncertainty and capture the substantial opportunities unlocked by the next wave of innovation.

Remy POMATHIOS Head of Private Markets Investments, Indosuez Wealth Management in Switzerland
Aurélie MAILLARD Global Head of B2B Distribution Private Markets, DPAM in Switzerland

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The information available on this tool are directed only to citizens / residents of the countries in which the Funds are authorized for distribution, as well asto institutional investors. Persons not qualifying as investors in/from the above-listed countries or as institutional investors are invited to exit the website.The Funds are not sold or offered in the United States of America, its territories or possessions or to a “US person” as defined by Regulation S of the USSecurities Act of 1933, as amended.
The Investment Funds are organised either as a “société d’investissement à capital variable (SICAV)” or “fonds commun de placement (FCP) ” under Part I of the Luxembourg law of 17 December 2010 on undertakings for collective investment. They are authorised and regulated by the Luxembourg supervisory authority (Commission de Surveillance du Secteur Financier – “CSSF”). The Investment Funds may be authorised for distribution in various countries; official registrations should be checked on a case by case basis.
The information available on this tool are directed only to citizens / residents of the countries in which the Funds are authorized for distribution, as well asto institutional investors. Persons not qualifying as investors in/from the above-listed countries or as institutional investors are invited to exit the website.The Funds are not sold or offered in the United States of America, its territories or possessions or to a “US person” as defined by Regulation S of the USSecurities Act of 1933, as amended.
The Investment Funds are organised either as a “société d’investissement à capital variable (SICAV)” or “fonds commun de placement (FCP) ” under Part I of the Luxembourg law of 17 December 2010 on undertakings for collective investment. They are authorised and regulated by the Luxembourg supervisory authority (Commission de Surveillance du Secteur Financier – “CSSF”). The Investment Funds may be authorised for distribution in various countries; official registrations should be checked on a case by case basis.
The information available on this tool are directed only to citizens / residents of the countries in which the Funds are authorized for distribution, as well asto institutional investors. Persons not qualifying as investors in/from the above-listed countries or as institutional investors are invited to exit the website.The Funds are not sold or offered in the United States of America, its territories or possessions or to a “US person” as defined by Regulation S of the USSecurities Act of 1933, as amended.