economy
Software stock dogs have joined market rally. There's a classic investing lesson in the rebound
In a 2026 market that had Microsoft down close to 20%, looking for opportunities to buy after big drawdowns is coming to more tech and software stocks.
TL;DR
- Cybersecurity and enterprise software stocks snapped a losing streak in 2026, joining a market-wide rally.
- Fears that AI would negatively impact enterprise companies had led to significant declines in these sectors.
- Microsoft shares surged 13% last week after being down nearly 20% for the year.
- Investors rotated out of software and into AI infrastructure and semiconductors.
- Analysts like Brent Thill and investors like Michael Burry are becoming more bullish on software stocks after the recent selloff.
- ETFs like Global X Cybersecurity ETF (BUG) and First Trust NASDAQ Cybersecurity ETF (CIBR) saw significant gains last week after year-to-date losses.
- Analysts suggest that sharp stock drops can present buying opportunities, especially for contrarian investors.
- AI adds both opportunity and uncertainty, potentially leading to more M&A in the cybersecurity space.
- Investors may remain underweight on software but should watch for opportunities in niches during downturns.
- The market's performance after midterm election drawdowns can offer strong 12-month returns for patient investors.