Thoma Bravo co-founder Orlando Bravo on Wednesday said software stocks are “oversold” and the sector is being pulled down by a lack of profits.

“Most of these 300 publicly traded software companies, they don’t have enough profits,” he told CNBC’s “Money Movers.” “They trade as a multiple of revenue, and that’s very, very dangerous.”

Thoma Bravo, a software-focused investment firm founded in 2008, had over $181 billion in assets under management as of September.

Bravo said that as artificial intelligence poses a threat to software companies on a technical basis, domain experience becomes more valuable.

“There’s some jewels in the public markets right now that are worth so much, that have 30 years of domain expertise built into their product,” Bravo said. “And those companies are really, really cheap right now. We’re very active in looking at a lot of them.”

Bravo declined to name specific companies, but said that the domain experts in Thoma Bravo’s portfolio have seen the most benefits from AI with the largest returns on investment.

The firm’s recent acquisitions include talent platform Dayforce for $12.3 billion and aviation software Jeppesen ForeFlight for $10.55 billion.

Bravo said that code written by AI is innovating faster than some expected, but can’t fully replace the functions of research and development teams.

“About 80% of what those people do have nothing to do with writing code,” Bravo said.

“We would love to take that 15% of R&D spend and bring it to 2%, but we’re not seeing that because there’s a lot more that goes into delivering these solutions for enterprises,” he added.