In a recent Mad Money segment, Jim Cramer argued that the market has misread the software selloff of 2026, treating profitable, growing enterprise franchises as if their business models were about to disappear. His frustration was pointed at the biggest names in the group, and his framing was blunt: “The market has collectively decided that no software is safe from AI fueled competition. Sometimes the selling goes too far.”
The names he keeps returning to are ServiceNow (NYSE:NOW | NOW Price Prediction), Salesforce (NYSE:CRM), Cadence Design Systems (NASDAQ:CDNS), and Workday (NASDAQ:WDAY). Each has beaten earnings for four straight quarters, each is growing revenue by double digits, and each is now selling for a fraction of what it fetched a year ago.
The question Cramer wants investors to sit with is whether the market is discounting a real threat or a rumored one. His view is that most of the fear is theoretical and that fundamentals are still doing the talking.
The Selloff Stopped Being About Earnings
Cramer made a specific claim about what changed this year. “I used to think that these declines factored in earnings miss. That would make sense. A richly valued software company can screw up and see its stock eviscerated. But as the year dragged on, it became more and more obvious to me that the sellers weren’t betting on a miss. They were thinking that these companies were worthless.”
ServiceNow is the cleanest illustration. The stock trades at $119.49 and is down 22% year-to-date, yet the company reported Q2 subscription revenue of $3.877 billion, up 23% in constant currency, with a 98% renewal rate.
Cramer noted that ServiceNow fell to $81 in April, trading at roughly 20x forward earnings, before working back to where it trades today. Bill McDermott used the earnings call to argue that the platform offers optionality across every AI outcome, telling investors that “Our platform is optionality on all AI outcomes, not a bet on any one.”
The Q2 8-K filing shows agentic AI in production customers grew 9x over the last nine months, which does not read like a company being displaced.
Cadence and the Case for Proprietary Platforms
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Cramer’s sharpest illustration is Cadence, which sits at $316.52 and is up only 1.26% year to date despite Q2 revenue of $1.58 billion, growing 24% year over year.
His summary of the analyst mood: “Every single analyst is terrified that an AI agent spawned by Anthropic or OpenAI is going to do to Cadence. Well, let’s just say better than what Cadence does.” He treats that fear as misplaced because Cadence sits inside a physics-based, silicon-correlated workflow that no prompt has meaningfully replicated.
CEO Anirudh Devgan argues the moat is deepening rather than eroding, saying on the call that “The ground truth will prevail. This three-layer framework will prevail.” Agentic AI, in his telling, actually pulls more calls into Cadence’s engines.
This is the distinction Cramer keeps drawing between design-facing tools like Adobe (NASDAQ:ADBE), Wix, and Figma, where disruption has teeth, and proprietary platforms like Cadence that remain structurally hard to replace.
Salesforce, Workday, and the Theoretical Threat
Cramer’s frustration crystallized around a simple point. “For most of these companies, that AI competition remains purely theoretical. The software companies have done their best to embrace AI, literally trying to shed anything that could conceivably be cloned by a prompt or, worse, beaten by a prompt.”
Salesforce trades at $196.14 with a forward P/E of 14x, after Q1 revenue of $11.13 billion and Agentforce ARR crossing $1 billion. Marc Benioff addressed the narrative directly, saying, “It’s the end of software that makes humans do all the work.”
Workday trades at $190.64 after a 31.67% rally over the last month, driven partly by Silver Lake takeover speculation. Cramer noted the stock jumped from $172 to $206 in a single session amid takeover speculation, which suggests private capital sees value the public market refuses to.
His closing thought is where the argument lands. “I think it will ultimately sort itself out as a software stock simply become too cheap to ignore. That’s good news for those who bought them lower this summer.” He does not expect software to reclaim its historical premium, and he prefers hardware as the simpler story, but the extinction bet appears to have overshot.
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