AI Reshapes Software Industry as Winners and Losers Emerge

October 21, 2026 - 11:51

Citi analyst Tyler Radke says artificial intelligence is dividing the software sector into clear winners and losers, as companies that have built strong AI capabilities pull ahead while others struggle to keep pace. His comments come as Salesforce agreed to acquire Braze for $47.50 per share, a deal that highlights how established players are spending heavily to strengthen their positions in an increasingly competitive market.

Radke's view reflects a broader shift in how investors are evaluating software companies. Firms that can demonstrate real revenue gains from AI products are being rewarded, while those with vague AI strategies or slow product rollouts are facing tougher scrutiny. The gap between the two groups has widened over the past year, and analysts expect the trend to continue as enterprise customers become more selective about where they spend their technology budgets.

The Salesforce deal for Braze, a customer engagement platform, fits into this pattern. Salesforce has been working to embed AI across its product lineup, and adding Braze's messaging and automation tools could help the company offer more complete solutions to its customers. The purchase price of $47.50 a share represents a significant commitment, and it signals that larger software vendors are willing to pay up for assets that strengthen their AI offerings.

For smaller software companies, the pressure is mounting. Those without a clear path to monetizing AI may find it harder to attract investment or command premium valuations. Radke's assessment suggests the market is no longer treating AI as a distant promise but as a near-term factor in determining which companies thrive and which fall behind.