Zoho founder Sridhar Vembu said that software stocks of massively over-valued companies were coming down and commented that: “Software stocks are coming down hard. I see it as massively over-valued companies coming down.” He pushed back against the view that AI-driven code will destroy the software industry, arguing instead that valuations were unsustainably high. Vembu said mature software firms should not trade at 30-40 times earnings and are more likely to settle at 10-15 times, while earnings themselves could decline as companies lose pricing power. He cited firms such as Salesforce and ServiceNow, noting that their model of using high-flying stock for acquisitions and aggressive upselling would become untenable once valuations compress. According to Vembu, this shift is driven more by intensified competition than AI alone, though AI may accelerate it. He added that lower enterprise software costs could create major opportunities for Indian IT services firms, which could replace platforms like Salesforce and deliver savings of 60-80% to clients. Sridhar Vembu Says His Company Uses AI to Boost Productivity and Streamline UI Development but Does Not Force or Mandate Its Use.

“AI Based Code Will Destroy the Software Industry”, Says Sridhar Vembu

 

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