Investors spent the past year selling the software that runs corporate back offices — payroll runs, expense approvals, IT tickets, contract signatures — on a single premise: these products are priced per employee, and artificial-intelligence agents will mean fewer employees. Twelve months on, that trade has cost holders 22% on average, and two names, Intuit and monday.com, are still more than 57% below their highs.

Then, in late July, Nvidia chief executive Jensen Huang told the Computex computing trade show in Taipei that it is an "incredible time" to be a software company, describing AI agents as a "tool user" of existing software rather than its executioner — "the world is no longer limited by the number of people." The S&P 500 software sector gained 6.4% in a session, its best day since early 2025. Money rotated out of semiconductors and into software, with the iShares software exchange-traded fund up about 7% over eight sessions while its semiconductor equivalent fell 8.5%.

The month is four days

Between 8 July and 7 August, the nine names averaged +24.5% equally weighted. Weight them by market value and the figure drops to +19.2%: the two biggest, ServiceNow and ADP, were among the three weakest. Strip out the four sessions from 23 to 29 July — worth 18.7 points on their own — and the nine average +4.9%. Strip out Paycom, whose 6 August results drove a 23.8% single session, and the remaining eight average +2.0%, with ServiceNow (−4.5%) and monday.com (−5.9%) negative.

That the move was sector-wide rather than company-specific is visible in the names outside the group: Paylocity rose 20.1%, Dropbox 16.8% and Zoom 7.7% in the same four sessions. The sharpest tell is ServiceNow, which sells cloud workflow software routing IT, HR and security requests for large enterprises. It fell 6.5% on its own 22 July results day despite beating on revenue, then rose 21.3% over the following six sessions on someone else's narrative. Workday, which sells per-employee HR and finance software to large employers, fell 6.2% the same day and rose 26.9% in the same window.

The seat is not disappearing — but nothing is accelerating

On the headcount question, the data cut against the bears. ADP, the largest payroll processor, reported US pays per control up 1% for the June quarter and fiscal 2026, guided to 0–1% for fiscal 2027, with client retention at a record 92.1% and bookings up 6%. Paycom, which sells a single-database HR platform to small and mid-sized US employers, told investors client employment growth is stable and consistent with historical levels. ServiceNow renewed 98% of contracts, grew current remaining performance obligations 21.5% to $13.2bn, and disclosed that roughly half its new business is now sold on non-seat pricing — its unit of sale is migrating, not vanishing.

What is missing is re-acceleration. Workday reiterated, rather than raised, fiscal 2027 subscription revenue of $9.925–9.950bn while lifting margin guidance to 30.5%; its story is cost discipline plus Elliott Management's $2bn stake and a $5bn buyback. monday.com, the smallest member, sells per-seat work-management software and guided second-quarter growth to 18–19% from 24% reported, with net dollar retention at 110% and expected to slip further. Intuit, owner of QuickBooks accounting and TurboTax, decelerated to 10.4% from 17.4%. ServiceNow's own GAAP operating income fell 55% year over year to $162m on AI infrastructure and acquisition costs.

Verdict on the business: CONTRADICTS. The rally was not earned by the quarter it followed.

Valuation splits five ways

Stretched: ServiceNow's trailing price-to-sales went 6.69 in May, 7.76 on 29 July, 8.76 now — a 31% expansion against a $15m raise to a $15.77bn subscription guide. When Abby Joseph Cohen flagged it in mid-July, 2027 consensus earnings of about $5.00 implied roughly 20x; the same estimate now implies 24.9x.

Supported: Paycom grew revenue 9.8% (up from 7.8%), expanded operating margin to 31.7% from 23.2%, raised guidance and cut its share count 20% this year; it trades at 18.0x forward earnings and 13.9x trailing enterprise value to EBITDA, the cohort's cheapest. Workday sits at 16.7x forward earnings with a 6.3% free-cash-flow yield; DocuSign, the e-signature vendor now pushing into contract management, at 13.3x with a 9.7% yield on 8.7% growth.

Cheapest and least repaired: Intuit, at 11.9x forward earnings and an 8.7% free-cash-flow yield, is the only member whose price-to-sales sits below its May level.

Structural exception: Veeva, which sells clinical, regulatory and commercial software only to drugmakers, has grown 16–16.7% for five straight quarters while annual operating margin went 18.2% → 25.2% → 28.7%. It also carries the richest multiple, 10.3x forward sales.

Agreeing on the downside: monday.com, and Bill.com — which automates supplier payments for small businesses — turned GAAP-profitable only last quarter, at a 1.1% margin.

The tape has repaired faster than the fundamentals: ADP and Paycom now trade above rising 50- and 200-day averages, ServiceNow, Workday, Bill.com and DocuSign crossed into uptrends within the last seven sessions, and Intuit and monday.com have not. Ninety days ago every one of them except Bill.com was in a downtrend.

The setup

Where it stands — A sector-wide narrative rally, concentrated in four sessions, has lifted multiples ahead of any measurable change in billings.

Would confirm — ADP pays per control printing above 1% and Workday raising, not reiterating, fiscal 2027 subscription revenue.

Would invalidate — monday.com's net dollar retention falling below 110%, or ServiceNow's current remaining performance obligation growth slipping under 20%.

Watch next — Workday's fiscal Q2 results and monday.com's Q2 report, both due within weeks.

Valuation — ServiceNow 30.7x forward earnings versus 77.6x trailing; Intuit 11.9x forward against 19.7x trailing, the cohort's cheapest.