I came to the opposite conclusion using similar logic. If software is just bits being fed into the machine then there is no limit to the number of bits or the complexity of their arrangement beyond the feed rate of the machine. The bits that make up software do not have any weight to them. There is a strong limit to how much concrete and steel you can add to a bridge. There is a limit to how many neutrons you can shove into the nucleus of an atom, or how many carbon rings you can chain together. Software is unique in that it escapes almost the entirety of physics as a limiter to what can be done, being really only subject to the speed of light as a limit to the rate at which things can be done.

Software is not the bits in the machine, it's the language of expression. "let z = 1" is software. It has a lot of implications at the bit level, yes, but that's well handled by compilers. But just at the level of expression, it's very complicated.