After a long rally driven by excitement around artificial intelligence (AI), markets are now shifting from narrative to numbers, and the adjustment has been sharp.

The scale of the pullback is now visible in several of the best-known names. Microsoft shares are about 17.2% below their 52-week high, a decline that matters because Microsoft has been treated as the market’s safest AI proxy.

Salesforce is about 38.1% below its 52-week high, a much deeper fall that reflects how quickly enthusiasm fades when growth and pricing power look less certain.

Meanwhile, Oracle is about 44.7% below its 52-week high, a move that signals how unforgiving markets can be when expectations get ahead of delivery.

Adobe has also seen a sharp decline and is about 36.4% below its 52-week high, showing that even dominant subscription businesses can be repriced when the market questions whether AI upgrades will translate into higher willingness to pay.

The immediate pressure on valuations reflects a widening gap between expectation and execution. Many leading software firms invested heavily to position themselves as AI leaders, but the revenue impact has been slower and more uneven than markets initially priced in. AI has increased costs faster than it has lifted earnings, particularly through spending on data centres, cloud infrastructure, specialised chips, and engineering talent. For listed firms, that has meant margin pressure at the same time as growth expectations remain elevated.

A second driver is saturation risk in core enterprise software markets. The biggest companies already dominate their segments. AI features are increasingly treated by customers as enhancements rather than reasons to pay meaningfully higher prices. That makes it harder for companies to justify the valuation multiples that were built on assumptions of a new wave of explosive growth.

Investor psychology has also shifted. During the early phase of the AI boom, markets rewarded exposure over profitability. That tolerance is fading. Software firms are now being judged on cash flow discipline, return on capital, and evidence that AI tools improve customer retention or unlock new spending rather than simply defend existing products. Where companies have struggled to demonstrate this clearly, share prices have adjusted lower.