The risk-off approach to technology and software stocks in the past few weeks is reshaping expectations around Europe’s next big IPO window.

Software stocks in both Europe and the US have been hit hard by growing fear that agentic AI might soon to disrupt the business models of enterprise software business, with clients potentially switching from legacy software contract renewal cycles to AI-powered co-working tools.

The sell-off over SaaS is almost certainly overdone

Ripping out enterprise software systems that have been embedded in corporate systems over decades to take a punt on LLM technology which is only delivering modest productivity gains would, at present, represent corporate foolhardiness at an almost quixotic level. But boards are undoubtedly under pressure: stay in the AI-adoption slow-lane and you risk being singled out, even as 72% of S&P 500 companies point to AI as a material risk in public disclosures, citing the potential for failed projects, service breakdowns, and cybersecurity incidents.

All the same, equity investors aren’t waiting to see how these tensions play out – they’re selling anything that might have even modest exposure to AI disruption.

This is likely to have an impact on IPOs in Europe, as businesses and their advisors gear up for listings around the traditional Easter window.

Source: Dealogic

“The challenge for IPOs at the moment is that it’s really anybody’s guess which sector might next suffer from fears over the possible disruption of AI,” said an ECM investor. “When there are so many question marks over this disruption is very hard to find a price for anything.”

There are already reports that the London IPO of Norwegian software business Visma, one of the largest listings in the pipe for 2026, will likely be pushed to the second half of the year given the impact of the recent sell-off of SaaS stocks.

“There is a real repricing of software taking place at the moment,” said a banker close to the Visma IPO. “The problem is not in our view that these businesses go away overnight, but that AI limits the base growth rate and terminal value to essentially zero.

“If these enterprise software businesses remain huge cash generators but have negligible growth prospectus that fundamentally changes the valuation question. It’s that whole Rule of 40 metric which is coming under serious question.”

A second ECM banker, away from the Visma situation, said that with the debate over software’s true value raging he wouldn’t be surprised if the IPO didn’t happen in 2026 at all.

Risk rotation

It isn’t just software businesses that been selling off in the past few weeks, although this segment has garnered the most press attention.

Several of the Magnificent 7 stocks, whose growth is now intrinsically tied to success of AI, have seen heavy selling due to capital expenditure needs that look unsustainable at best and impossible at worst. So investors are simultaneously selling the businesses that LLM models are predicted to disrupt and hedging exposure to AI champions.

Other hot risk assets from last year have also taken a battering, particularly cryptocurrencies. Bitcoin for example is trading below USD 66,000 far south of its early October high of over USD 124,000.

This calls into question any investment in technology or cryptocurrency IPOs, including Austrian crypto trading platform Bitpanda, which this news service reported was targeting a listing in the first half.

However, the second ECM banker noted that should the direction of bitcoin change, it could put a Bitpanda IPO back on the table quickly.

“Cryptocurrency trading isn’t going anywhere, so for Bitpanda I think the debate is just going to be around timing and valuation,” he said. “For software businesses like Visma though, I think the debate on valuation is much more serious,” he added.

Both bankers and the investor agreed that the market appeared to be taking risk off the table across any assets where valuations have been seen as running too hot.

“Valuations have been too high for too long and I suspect that some of this recent selling is actually an excuse for portfolio managers to derisk these positions,” noted the investor.

Real world asset focus; a quieter IPO window

Several bankers speaking to ECM Pulse said that they expect a different flavour to the Easter IPO window, with less tech-exposed businesses in sectors like defence or industrials leading the way.

Submarine and naval technology business Gabler Group is already out in the market with a Frankfurt IPO, with defence contractor Vincorion targeting a listing on the same bourse in March.

Outside of these niche industry suppliers, pan-European defence contractor KNDS is still said to be targeting the first half of 2026 for a dual-listing in Paris and Frankfurt, although there is still the matter of the German government seeking to acquire a 25.1% stake in the business before a listing.

Advent and Cinven have also selected banks for the IPO of TK Elevator GmbH in Germany, and both the investor and the banker said that sellers would likely find high levels of demand for the asset should the sponsors try to speed up listing preparations to execute the deal before the European summer break.

Outside of these businesses, the UK listings of driving services company RAC and EQT-backed veterinary firm IVC Evidensia both likely fit the mould of listing candidates without immediate exposure to the disruptive forces of artificial intelligence – and in fact can use the technology to enhance their equity stories.

Alongside these businesses, Denmark’s Leo Pharma and UK bookseller Waterstones are also likely fit the bill.

There are plenty of businesses that can almost certainly ride out market fears over AI disruption and price successful IPOs.

But European dealmakers are operating in a market where geopolitical and macroeconomic risks are high – alongside stock valuations enduring, at best, a reset.

In this febrile environment, IPOs issuers will have to be far more flexible on their plans than perhaps they thought at the start of the year.

“ECM timelines are far more up in the air in this new world. We have gone from people worried about geopolitical shocks to whatever the next AI bomb might be,” the second banker said. “But I think – like geopolitical shocks – at some point the market will get used to these pronouncements on AI and look through them a little.

Until then, corporate players across Europe’s more traditional sectors such as defence and industrials will step up to enjoy their time in the sun.