Investors are seeing a disconnect in how AI stocks and software stocks are valued, with software stocks experiencing a significant slump in 2026. Major software companies like Microsoft, Shopify, Adobe, and Salesforce are down due to fears that AI could disrupt their business model. However, J.P. Morgan research suggests that the AI-driven software sell-off may be overblown.

Tech investors are worried about AI disrupting the software industry and AI hyperscalers overspending on infrastructure, leading to an indiscriminate sell-off. J.P. Morgan describes this as “broken logic” and suggests the market is selling irrationally. The recent AI-driven stock sell-off may be an opportunity to invest in software stocks.

J.P. Morgan research indicates that the AI-driven software sell-off is an overshoot, recommending investors consider buying “AI-resilient” software stocks. Software companies offer specialized solutions with competitive advantages that AI companies can’t replace. This could be a good time to invest in the iShares Expanded Tech-Software Sector ETF for exposure to software majors like Microsoft and Palantir.

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Read more at Nasdaq: J.P. Morgan Research Says: ‘Broken Logic’ Is Driving This Software Stock Sell-Off