Software Stocks Slumped on AI Fears in 2026: Analysts Predict a Rebound

Software stocks lagged the broader market for much of 2026, even as fears that artificial intelligence would gut the sector's fundamentals largely failed to materialize.

Nuveen chief investment officer Saira Malik argues the sector's earnings tell a different story than its stock charts, and that a rebound may be closer than the price action suggests. The comments arrive a day after Nvidia's earnings eased fears about AI spending, and hours before Workday, Autodesk, and Marvell rounded out a heavy week of technology results.

Why Software Stocks Got Punished for No Reason

Malik said investors spent much of 2026 worrying that generative AI would gut software company headcounts and revenue growth, a fear that hit the sector broadly and indiscriminately.

She argued the numbers never backed up the panic.

"When you separate the signal from the noise, it didn't show up in software companies fundamentals. Revenue growth rates for software companies remained fairly stable."

Saira Malik, Bloomberg

Margins and earnings held up too, she said, and the wave of job cuts many expected AI to trigger across the sector has not materialized to the degree feared.

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