JPMorgan: Concerns about AI overhyped for software stocks

JPMorgan strategists say software stocks are expected to rebound from a historic decline, as the market has already priced in unrealistic short-term impacts of artificial intelligence on the industry. Led by Dubravko Lakos-Bujas, the team pointed out that investors should increase holdings in high-quality software assets resistant to AI shocks, as this “extreme price movement” suggests that capital is at least temporarily likely to flow back into the sector. The team wrote in their research report: “Given that positions have been significantly reduced, the market’s outlook on AI impacts on the software industry is overly pessimistic, and with the industry fundamentals remaining solid, we believe the risk-reward balance is increasingly tilted toward a rebound.”