Software stocks have fallen sharply in 2026 as many investors see AI as a threat – but JPMorgan describes some of these stocks as particularly resilient.
• Software sector has lost around $2 trillion in market value, according to JPMorgan
• JPMorgan names “AI-resilient” software stocks
• Largest price decline in the software sector outside of a recession in over 30 years
The biggest sell-off in 30 years
The software sector will experience a historic slump in 2026. Well-known names such as Microsoft, Salesforce and Adobe have lost double-digit value since their highs. The iShares Expanded Tech-Software Sector ETF (IGV) fell by more than 20 percent in just a few weeks. According to a JPMorgan analysis reported by CNBC on February 10, 2026, the sector as a whole has lost around $2 trillion in market capitalization. Its weight in the S&P 500 fell from 12 to 8.4 percent. JPMorgan rates this as the largest software sector decline outside of a recession in more than 30 years.
The trigger was growing concern that agent-based AI systems could replace existing software products in the medium term. The market sold broadly and indiscriminately; both high-quality companies and speculative growth stocks were punished equally.
JPMorgan’s counter-thesis: “Unrealistic scenarios”
In an analysis dated February 10, 2026, JPMorgan contradicts the prevailing panic. Dubravko Lakos-Bujas, head of global market strategy at JPMorgan, wrote that the market is pricing in near-term AI disruption scenarios that are unrealistic, according to CNBC. Given the oversold positions, the overly pessimistic assessment and solid fundamentals, the risks are increasingly shifting towards a recovery. Kriti Gupta, global investment strategist at JPMorgan, added that the market is selling indiscriminately. Even companies that stand to benefit from AI infrastructure demand have found themselves in a downward spiral.
In the analysis, JPMorgan names 19 software companies that are considered particularly resilient to AI-related disruption. Particularly highlighted are Microsoft and CrowdStrike, which, according to the bank, benefit from AI-driven efficiency gains in work processes and are protected by high switching costs and multi-year contracts. The list includes ServiceNow, Palo Alto Networks, Snowflake, Datadog, Okta and Zscaler. As a tactical argument, JPMorgan cites that short selling rates in the software sector are at record levels and hedge funds are currently favoring AI semiconductors over software, a constellation that the bank says points to an impending recovery.
An article by The Motley Fool from February 17, 2026 takes up the thesis and describes the market logic as contradictory: If AI is actually going to displace the entire software industry, the shares of the AI companies themselves would have to be valued higher. On the other hand, if AI is overvalued and the billion-dollar investments do not pay off, there is less reason for software companies to worry. Both cannot happen at the same time.
ServiceNow as a prime example
ServiceNow is one of the 19 stocks on JPMorgan’s list and illustrates the discrepancy between operational strength and price performance. The company released its quarterly results for the fourth quarter of 2025 on January 28, 2026. According to the press release, sales were $3.57 billion, an increase of 20.5 percent year-on-year. Subscription revenue rose 21 percent to $3.47 billion, exceeding its own forecast by 1.5 percentage points. Adjusted earnings per share were $0.92, beating analyst expectations. The renewal rate of customer contracts was 98 percent.
For the 2026 financial year, ServiceNow forecast subscription revenues of between 15.53 and 15.57 billion US dollars, which would correspond to growth of around 20 percent. CEO Bill McDermott According to the press release, ServiceNow described ServiceNow as the best positioned AI company in the enterprise sector and pointed out that the platform is increasingly serving as a central control authority for AI-supported business processes. The AI product package “Now Assist” doubled its new business contribution compared to the previous year. ServiceNow also acquired three AI and cybersecurity companies in 2025, including Moveworks for $2.85 billion and Armis for $7.75 billion. Despite these results, the stock was trading well below its highs at the time of JPMorgan’s analysis, underscoring the bank’s thesis that the market is currently not adequately pricing in fundamental strength in the software sector.
D. Maier / editorial team finanzen.net
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