Software stocks are off to their worst start to a year since 2022, with a sector-wide decline of 15% in early 2026, dashing hopes for a turnaround. The sell-off has been driven by renewed investor anxiety over competitive threats from artificial intelligence, specifically ignited by the January 12 launch of Anthropic's "Claude Cowork" AI service. This tool, capable of generating spreadsheets from images and drafting reports, exemplifies the disruptive potential that is spooking the market.
Major software firms like Intuit, Adobe, and Salesforce have seen steep declines, with Intuit plunging 16% in a week. Analysts note a deep-seated pessimism, with investors seeing "no reasons to own software" despite record-low valuations. The Morgan Stanley software basket now trades at 18 times forward earnings, far below its historical average, as the market grapples with uncertainty over how AI will reshape the software ecosystem and recurring revenue models.
In contrast, the outlook for semiconductor makers like Nvidia is robust, with profit growth forecasts jumping to 59% in 2026, buoyed by massive AI infrastructure investments from tech giants. This highlights a stark divergence within the tech sector.
Concurrently, a new CB Insights research report outlines pivotal technology trends for 2026, emphasizing practical advancements. A central theme is the evolution of agentic AI, which is automating back-office operations in finance and complicating ROI calculations. The report also identifies a major shift in financial innovation: stablecoins are transitioning from niche crypto tools to corporate staples for treasury management and cross-border payments, accelerated by regulatory frameworks like the GENIUS Act and infrastructure consolidation, such as Ripple's acquisitions.
Other key trends include the transformation of retail through AI shopping agents, AI-driven advancements in healthcare for patient scheduling and drug discovery, and the evolution of data centers to support AI's energy demands. The overarching forecast is for a year where tech investments will favor scalable, compliant, and outcome-driven solutions.
