tech

February 16, 2026

AI fears are hitting software stocks the hardest. Citi sees a buying opportunity in many names

Citi chose software stocks with earnings momentum and declines of more than 10% in the last month.

AI fears are hitting software stocks the hardest. Citi sees a buying opportunity in many names

TL;DR

  • Software stocks have declined significantly due to fears of disruption from artificial intelligence.
  • The iShares Expanded Tech-Software Sector ETF has fallen over 20% year-to-date.
  • AI startup Anthropic's new tools have intensified fears of AI impacting software business models.
  • Citi identified software stocks with market caps over $2 billion, down at least 10% in the past month, and with rising consensus EPS estimates.
  • Microsoft and Palantir are among the stocks mentioned by Citi as potentially undervalued.
  • Citi believes improving earnings revisions will be a key catalyst for investors to return to the software sector.

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