Software stocks got hammered in 2025 and early 2026 because of AI disruption fears. However, as legitimate as the concern may be, the corresponding sell-off was driven by emotions. The depth of the declines was an overreaction, and as a result, software stocks have overextended and are primed to rebound.
The question is how long it takes for the bottoms to form and for the rebound to begin. It may be a few quarters, as long as it takes for the winners to rise and earnings outlooks to stabilize, but a rebound is likely. This is an examination of four winners ready to lead the pack once the software rebound begins.
