Yahoo Finance·2026-02-17 11:05Core Viewpoint - The decline in software stocks is a significant investment trend in 2026, with major SaaS companies facing substantial losses due to fears surrounding AI's impact on their business models [1][2]. Group 1: Software Stock Performance - The Nasdaq-100 index is down approximately 3% year to date, while the S&P 500 index remains relatively unchanged [1]. - Major software companies have seen significant declines: Microsoft is down 16%, Shopify down 26%, Adobe down 27%, and Salesforce down 30% [2]. Group 2: Investor Concerns - Investors are worried that advancements in AI could disrupt the enterprise software business model, leading to vulnerabilities for established software companies [2]. - There are two primary concerns: the potential disruption of the software industry by AI and the fear that AI hyperscalers are overspending on infrastructure without generating expected returns [5]. Group 3: J.P. Morgan's Analysis - J.P. Morgan's research suggests that the current sell-off in AI-driven software stocks is exaggerated and based on "broken logic" [3][6]. - The firm argues that if AI is truly set to disrupt software companies, then AI stocks should be more valuable, indicating a disconnect in market logic [6]. Group 4: Investment Opportunities - J.P. Morgan encourages investors to consider purchasing "AI-resilient" software stocks that are likely to benefit from AI enhancements in their workflows, viewing the current sell-off as an "overshoot" [8].