---
title: Why Software Valuations May Drop Despite Earnings Growth
description: "BofA highlights that software stocks could see lower P/Es even with strong earnings. Market disruption is priced before profits, low-multiple tech tends to lag, and EPS growth can compress valuations when equity supply rises. Post-ChatGPT, IT Services lost their premium, reflecting repricing rather than sentiment. Rising asset intensity, weaker leverage, and private market issues add risk. Valuations fall not from failure but from resetting expectations, meaning even strong software companies aren’t immune.\n\nSource: BofA, Neil Sethi @neilksethi"
---

[Syz The Moment](https://blog.syzgroup.com/syz-the-moment)

# [Why Software Valuations May Drop Despite Earnings Growth](https://blog.syzgroup.com/syz-the-moment/why-software-valuations-may-drop-despite-earnings-growth)

 Written by [Charles-Henry Monchau, CFA, CMT, CAIA](https://blog.syzgroup.com/syz-the-moment/author/charles-henry-monchau) | Feb 27, 2026, 2:36:22 PM

[View full post](https://blog.syzgroup.com/syz-the-moment/why-software-valuations-may-drop-despite-earnings-growth)

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