Software stocks climbing back after getting left behind — ride the recovery
Software stocks are bouncing back after getting crushed earlier this year when investors fled to AI hardware plays. They've just reclaimed a key technical milestone, signaling the rotation back into software is gaining steam.
Idea
Earlier this year, investors dumped software companies en masse, worried that AI would make them obsolete. But those same software firms are now proving they can integrate AI into their products and actually grow faster. The sector just crossed an important milestone that historically marks the start of sustained recoveries. Meanwhile, money is rotating out of overheated AI hardware stocks — Bitcoin ETFs alone saw $3.4 billion in outflows, and Wall Street analysts are growing skeptical on the broader rally. Software looks like the next destination for that rotating cash, and valuations are still below where they were before the AI panic started.