Observed Signal · Mar 17, 2026 · Financial Commentary · Source: CNBC Technology · Impact: 2/5 · Sentiment: Negative
AI Disruption Justifies Valuation Cuts, Says Orlando Bravo
Thoma Bravo co-founder Orlando Bravo said at the firm's investor meeting that artificial intelligence will accelerate disruption of many public software companies and that some recent valuation declines are justified. He also said some software businesses were unfairly punished and could emerge as winners in the "agentic era." Bravo did not identify specific companies. He acknowledged his firm overestimated growth at Medallia, leading to an overly high purchase price in the 2021 $6.4 billion acquisition. The firm had over $183 billion in assets under management across 77 companies as of December.
Comments from a major private equity founder about AI-driven disruption and software valuations are relevant to investors and software vendors but are commentary rather than a major policy or product change.
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Key Takeaways & Evidence Grounding
- Orlando Bravo, co-founder of Thoma Bravo, said AI will disrupt many public software companies and some valuation hits are warranted.
- Bravo said some software companies were unfairly punished in recent sell-offs and could be winners in the "agentic era."
- Bravo did not name which companies he believes deserve valuation cuts or which were unjustly punished.
- Thoma Bravo was founded in 2008 and had over $183 billion in assets under management across 77 companies as of December.
- Bravo acknowledged Thoma Bravo overestimated Medallia's growth, saying the firm paid too much in its $6.4 billion acquisition of Medallia in 2021.
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Orlando Bravo: Software Stocks Oversold, Profits Needed
Thoma Bravo co-founder Orlando Bravo said software stocks are "oversold," arguing that many publicly traded software companies lack sufficient profits and therefore trade as risky revenue multiples. He noted that artificial intelligence is accelerating code creation but cannot fully replace broader R&D functions, and that domain-expert software businesses are currently undervalued. Thoma Bravo, founded in 2008, had over $181 billion in assets under management as of September and has recently acquired talent platform Dayforce for $12.3 billion and aviation software Jeppesen ForeFlight for $10.55 billion.
AI Disruption Fears Continue to Haunt Software Stocks
David Sambur, co-head of private equity at Apollo Global Management, told CNBC the selloff in software stocks driven by fears of AI disruption is likely far from over. He said software companies face intensified competition from players such as Anthropic and OpenAI, creating uncertainty around revenue models, gross margins and valuations. Sambur warned AI-driven displacement is occurring faster than in his career and that markets are pricing in greater margins of safety for these "very large unknowns." He noted conservative corporate guidance and pointed to buying opportunities from deals or share repurchases. Several software firms including Intuit, Hubspot and Salesforce have announced buybacks, though RBC Capital’s Rishi Jaluria said buyback news is largely overshadowed by AI concerns and could limit future M&A activity.
AI Reshapes Software Landscape: 'Wartime' for Tech Investors
At Morgan Stanley's Tech, Media and Telecom conference, David Chen, head of global technology investment banking at Morgan Stanley, described the current software landscape as "wartime, not peacetime," arguing AI is reshuffling winners and losers in enterprise software. Investors are now asking whether AI benefits or threatens a company's core business rather than focusing on efficiency gains. Chen distinguished deterministic software (payroll, invoicing) that retains a moat from software that primarily organizes public data, which faces greater risk. He highlighted cybersecurity as a clear AI beneficiary and flagged next-generation semiconductors and systems addressing connectivity, compute, and energy bottlenecks. CNBC producer Jasmine Wu and Box CEO Aaron Levie were also cited; Levie suggested agents may become the primary customer base for surviving software.
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