Richard Windsor, founder of Radio Free Mobile, pushed back against the panic gripping AI stocks in a recent episode of Bloomberg Horizons Middle East & Africa. His argument is that the semiconductor tumble reflects rate sensitivity in richly valued names, and the market has overshot on software incumbents by assuming AI will hollow out application demand.
The Philadelphia semiconductor index fell as much as 6% on Thursday, right after its best quarter ever, and chip stocks are posting their worst two-day selloff in nearly a month. Yet only about a 20% probability of a Fed rate hike is priced in for July. In Windsor’s view, the market has gone too far, leaving quality software names trading below their long-term potential.
The AI Selloff Looks More Like a Valuation Reset Than a Demand Problem
Windsor believes that: “The stocks are basically reacting to the potential for interest rate increases because these are highly valued stocks. They’ve already run a long way. Consequently, they’re much, much more volatile than the average in the market.”
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) fits that description. Shares closed at $194.83 on July 2, down 12.46% over the past month, even after fiscal Q1 2027 revenue of $81.62 billion, up 85.2% year over year, and Data Center revenue of $75.25 billion.
CEO Jensen Huang framed why Nvidia’s opportunity is so compelling in the company’s Q1 earnings release: “The buildout of AI factories, the largest infrastructure expansion in human history, is accelerating at extraordinary speed.” The stock trades at a forward P/E of 23 and has a beta of 2.20.
Compute Demand Still Far Outstrips Supply
Windsor pointed to Micron Technology (NASDAQ:MU) and the premium prices private compute reseller Axiom charges both Anthropic and Google as evidence of “a market where there is extreme [shortage] of compute.” Micron’s shares dropped 19.61% in the past week to $975.56, but fiscal Q3 2026 revenue hit $41.46 billion, up 345.7% year over year, non-GAAP EPS printed at $25.11, and Q4 guidance calls for $50.0 billion in revenue at ~86% gross margin. CEO Sanjay Mehrotra said Micron’s “multi-year Strategic Customer Agreements will significantly enhance the durability and predictability” of results.
Why Wall Street Has Software Wrong
Windsor believes software is meaningfully overlooked today, and could be a place capital rotates to: “One sector that is underpriced would have to be the software sector. The general view of the market is the software sector selling to the market is dead because everyone is going to run AI and will no longer have to buy software. I think that’s taking it too far.”
Salesforce Is Already Turning AI Into Revenue
Salesforce (NYSE:CRM) closed at $166.11, down 37.77% over the past year, at a forward P/E of 12 with an analyst target of $246.44. AI monetization is accelerating, with Agentforce ARR reaching $1.2 billion, up 205% year over year. Combined Agentforce plus Data 360 ARR was nearly $3.4 billion. Marc Benioff called Agentforce “the biggest growth opportunity for our customers, and for Salesforce.”
Adobe’s AI Business Is Growing Faster Than Investors Realize
Adobe (NASDAQ:ADBE) trades at $219.72, down 41.95% over the past year, with a forward P/E of 9 and PEG of 0.58. Q2 FY2026 delivered record revenue of $6.62 billion, up 13% year over year, and AI-first ARR that tripled year over year to exceed $500 million. Shantanu Narayen tied it directly to the thesis: “Adobe delivered record revenue of $6.62 billion in Q2 reflecting strong AI-driven demand across our customer groups.”
Microsoft’s AI Spending Is Fueling Long-Term Growth
Microsoft (NASDAQ:MSFT) sits at $390.49, off 19.85% over 12 months, at a forward P/E of 20. Fiscal Q3 2026 revenue climbed to $82.89 billion (+18.3% YoY), Azure grew 40%, and Satya Nadella flagged that the “AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.” Commercial RPO stands at $627 billion, up 99% YoY. Heavy AI capex explains why some Magnificent Seven names have lagged pure-play chip winners despite strong demand signals.
What Investors Should Watch
Windsor’s thesis ultimately comes down to separating short-term market sentiment from long-term business fundamentals. While higher rates have pressured richly valued AI leaders, demand for compute continues to outstrip supply, and enterprise software companies are already generating meaningful AI-driven revenue growth. If those trends continue, today’s discounted software valuations may prove to be an opportunity for investors willing to look beyond the current AI rotation.
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