Software stocks mostly rebounded on Monday as Wall Street analysts pushed back against growing investor fears that artificial intelligence could disrupt the sector\u2019s business models.<\/p>\n
Oracle (ORCL) shares jumped nearly 10% after DA Davidson\u2019s Gil Luria upgraded the stock to Buy from Neutral, citing optimism about the company\u2019s OpenAI deal and pushing back against fears that AI would hurt its software business.<\/p>\n
“Software isn\u2019t dead,” Luria said in a note. “We believe companies will continue to pay for Oracle\u2019s products and that they will not be vibe coded away,”<\/p>\n
Oracle shares are down roughly 20% year to date as the broader industry has taken a hit.<\/p>\n
The Tech-Software Sector ETF (IGV), which also includes heavyweights like Microsoft (MSFT) and Palantir (PLTR), is down 20% year to date over fears that AI will take over tasks traditionally handled by enterprise software and disrupt their revenue models. On Monday, it was up 3%.<\/p>\n
Over the weekend, Wedbush Securities\u2019 senior equity research analyst Dan Ives added Salesforce (CRM) and ServiceNow (NOW) to the firm\u2019s AI 30 List, calling the recent software \u201cArmageddon\u201d narrative \u201coverblown” in a note.<\/p>\n
Salesforce is down roughly 26% year to date, while ServiceNow has fallen 32%.<\/p>\n
“We believe the market is baking in a doomsday scenario for software companies in the near-term, which we believe is extremely overblown,” Ives wrote on Sunday, adding that customers are unlikely to risk their data to accelerate AI adoption until migration projects become less complex and risky.<\/p>\n
The sentiment was echoed by Monday.com’s (MNDY) leadership during the company’s earnings call. The stock plunged 20% following a weaker-than-expected revenue forecast for the current quarter and full year.<\/p>\n
Management noted that customers still like their products and are trying to figure out the best way to leverage the technology.<\/p>\n
“For them, the best way to leverage that technology is use already systems they’re using before where they have most of the data and the context and the workflows,” Eran Zinman, Monday.com co-founder and co-CEO, said during the earnings call Monday morning.<\/p>\n
Victoria Fernandez, Crossmark Global Investments chief market strategist, said AI and software companies can “co-exist on some level, but the question is how much pricing power gets put in these companies.”<\/p>\n
“I do think you can dip your toe in the water on some of these that have had such significant pullbacks, and such strong balance sheets,” she added.<\/p>\n Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at <\/em>@ines_ferre<\/em><\/a>.<\/em><\/p>\n<\/p><\/div>\n<\/div>\n<\/div>