Speculators who kept calling for an artificial intelligence bubble to pop missed the disruption it is causing in many markets. In particular, the gaming industry must contend with AI writing code to offer virtual worlds. Software companies might need to slash monthly subscription fees to maintain competitiveness.
Unity Software (U) fell from a $52.15 high in December 2025 and closed below $19 last week. In its Q4 report, the firm included a weak outlook for the first quarter. CEO Matt Bromberg noted that Vector is growing rapidly. Unity 6 adoption is at the fastest rate the company has ever seen.
Unity’s momentum suggests that gaming stocks could be oversold. For example, Nintendo (NTDOY), Sony (SONY), Take-Two Interactive (TTWO), and Roblox (RBLX). Their valuations remain premium, but they’re worth keeping on a watch list.
Adobe Systems (ADBE) is by far the most heavily discounted SaaS stock. AI-related revenue is not yet meaningful. Yet, AI competitors like Alphabet (GOOG) continue to disrupt the space. Datadog (DDOG), MongoDB (MDB), Salesforce (CRM), DocuSign (DOCU), and Autodesk (ADSK) cannot yet replicate unique software offerings that AI cannot yet offer.
Microsoft (MSFT) shares continued to decline last week. The firm may be able to raise prices for its database, Office, or Azure services to offset the high costs of AI products and hardware-related investments.
ServiceNow (NOW) still trades at a premium. Despite acquiring Moveworks in December, markets are not yet treating NOW as an AI play. The company will need to show that Moveworks can deliver meaningful AI capabilities for customers. Crucially, it must do so without raising subscription prices. If AI competitors offer better solutions at lower costs, ServiceNow risks losing subscribers.
