software AM market analysis — 2026-09-04

The defining read-through for software this morning is a split one: artificial intelligence is widening the addressable market for the sector while simultaneously eroding the product moats that incumbents have relied on, according to ARK Invest’s analysis of software and cloud spending. That tension sits at the centre of how the sector is being priced and positioned.

Enterprise buyers are responding by demanding governance rather than novelty. Workflow automation vendors, per Activepieces, are building products around cross-system orchestration, auditability and human oversight, treating those features as prerequisites for enterprise deployment rather than optional extras. Healthcare software reinforces the same pattern from a different angle: Innovaccer’s review of population-health platforms shows purchasing decisions increasingly tied to regulatory compliance, interoperability and demonstrated care outcomes, with vendors expected to take on accountability for results rather than simply supplying tools.

The practical test now facing AI-enabled software vendors has shifted from proving adoption to proving operation. Research from Arcade frames the key hurdle as moving pilots into governed, reliable production workflows, with permissions, security and scaling as the sticking points. Where vendors can show that shift, particularly platform and infrastructure providers with proprietary data and orchestration capabilities, they stand to benefit; where they cannot, the erosion of traditional moats becomes the more relevant story.