(Yahoo! Finance) - The spread of artificial intelligence may make finding a great growth stock challenging in the near future.
"We expect investor uncertainty around AI disruption and long-term growth estimates will persist for quarters if not years, requiring investors to be selective within the universe of secular growth stocks," Goldman Sachs strategist Ben Snider warned in a new note.
"For secular growth stocks facing AI disruption risk, resolving this uncertainty will likely require evidence that AI is not displacing existing business models."
Growth stocks have been hit from all sides this year, from AI disruption fears to high AI spending to higher-for-longer interest rates amid the US conflict with Iran.
The "Magnificent Seven" stocks sport valuations near fresh lows relative to the S&P 500 (^GSPC), JPMorgan strategist Mislav Matejka pointed out in a note last week.
"Mag 7 relative [to S&P 500] is not acting as a safe haven," Matejka said.
The Magnificent Seven is a group of seven cash-rich, large-cap technology stocks that have collectively dominated the US stock market and driven the majority of the S&P 500's gains since 2023. It includes Nvidia (NVDA), Amazon (AMZN), Tesla (TSLA), Microsoft (MSFT), Google (GOOG), Apple (AAPL), and Meta (META).
The only two Magnificent Seven stocks up this year are Amazon and Google, each sporting marginal gains. Tesla has been the worst-performer with a 23% plunge.
Goldman's Snider said Meta, Amazon, and Google could regain their growth stock stride given their leadership positions in tech, yielding strong results this year and next.
Meanwhile, software stocks have been obliterated as the "SaaSpocalypse" rolls on.
This market event has erased about $2 trillion in market capitalization from software stocks this year. Investors are realizing that generative AI — specifically "agentic" AI — is no longer just an add-on but a potential replacement for traditional software.
The crisis has fundamentally broken the "per-seat" subscription model. If an AI agent can do the work of five people, a company only needs one software license instead of five, leading to a "seat compression" that has decimated recurring revenue projections.
ServiceNow (NOW) shares have crashed 48% this year, Salesforce (CRM) is down by 36%, and DocuSign (DOCU) has shed 42%.
"Put simply, we see risk that concerns around software application architecture, business model durability and terminal value intensify in the months ahead," Citi analyst Tyler Radke wrote in a new note. "Privately held AI companies are on track to add $100 billion plus of net-new revenue in the years ahead, materially eclipsing the $50 billion of traditional application software."
By Brian Sozzi - Executive Editor
April 13, 2026
