By Adam Clark
The software sector has suffered a roughly $2 trillion wipeout due to fears of disruption by artificial-intelligence technology. Analysts at J.P. Morgan think that's a buying opportunity -- and they have a long list of AI-resistant names to offer.
"The market is pricing in worst-case AI disruption scenarios that are unlikely to materialize over the next three to six months," wrote J.P. Morgan's Dubravko Lakos-Bujas and colleagues in a research note.
That creates a bargain-hunting opportunity, and the bank's analysts have a list of 19 stocks for their J.P. Morgan AI-Resilient Software Companies basket, which they recommend for investors looking to buy high-quality software names at a discount.
Microsoft is the heavyweight name, after a 19% decline in the past three months, which included a poorly-received earnings report, as investors were disappointed by Azure cloud-computing growth given the company's heavy capital expenditures. J.P. Morgan's analysts argue that the reaction was overdone, grouping Microsoft with ServiceNow, another software name on the list.
"Key take-aways from earnings releases on the Software side include [Microsoft's] Azure growing materially faster at a larger scale than it was 9-12 months ago and ServiceNow's resilient growth despite Federal Government headwinds," Lakos-Bujas wrote.
Much of the rest of the list is dominated by cybersecurity names, including large publicly traded players such as Palo Alto Networks and CrowdStrike, along with smaller peers Zscaler, Check Point Software and SentinelOne.
"Given the positioning flush, overly bearish outlook on AI disruption of Software and solid fundamentals, we believe the balance of risks is increasingly skewed toward a rebound, especially in higher quality Software segments (i.e., Cyber)," wrote the analysts.
Data-focused software names Snowflake and Datadog also appear on the list, alongside enterprise software companies such as Twilio and Okta.
"Enterprise software remains deeply embedded across the corporate landscape, underpinned by multi-year contracts and high switching costs that provide a significant buffer against near-term displacement," J.P. Morgan's team wrote.
Among industry-specific software players, the list features Veeva Systems and Guidewire Software, which make products for the life-sciences and insurance sectors, respectively, as well as real estate technology specialist CoStar Group and public-sector software company Tyler Technologies. The basket is rounded out by JFrog, SailPoint, Netskope and Q2 Holdings.
As for how long investors might have to take advantage of the selloff, the analysts think the window could be closing soon.
"Upcoming catalysts that could trigger a reset in positioning include Software earnings over the next two weeks... and a wave of Software companies' investor days kicking off toward the end of the month providing an opportunity for management teams to challenge the bearish narrative," Lakos-Bujas wrote.
Write to Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 10, 2026 11:12 ET (16:12 GMT)
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