JP Morgan Flags Potential Buying Opportunity After Software Stocks Slide on AI Concerns

“We think markets are pricing in near-term AI related disruption at levels that are unrealistic,”

the bank said in a note to investors. That overreaction could buying opportunities in tech

stocks to bounce back, the bank’s strategy team said. Led by Dubravko Lakos-Bujas at

JPMorgan Chase & Co., the team said investors could consider rotating into high-quality

software stocks they believe will hold up better against AI disruption and software stocks.

“Given the sector’s positioning flush, overly negative stance on AI disruption to software, and

solid fundamentals, we think the risks are skewed toward a bounce,” the team wrote in the note.

The price action software stocks have experienced recently has been “wild,” creating an

opportunity for investors to rotate back into software stocks in the near term, according to the

note.

Wall Street’s growing anxiety around AI spilled over into software stocks earlier this week. JP

Morgan software stock outlook took a hit last week after startup Anthropic launched its newest

AI tool. During the selloff, investors fretted about how the development of new AI tools could

cannibalize large, traditional software-as-a-service companies.

While it’s possible that AI could overtake traditional software companies one day, it’s far from

clear that will happen, the note said. What is clear is that sentiment around software stocks is

“quite negative” already. Despite soft forecasts around AI’s impact on software companies, JP

Morgan highlighted that recent quarterly earnings have been “stable” and analysts are still

predicting 16.8 percent earnings growth for the group in 2026.