Software Bear Market: 2 AI Stocks With 40% and 52% Upside to Buy Now, According to Wall Street
The Motley Fool
by newsfeedback@fool.com (Trevor Jennewine)February 24, 2026
AI-Generated Deep Dive Summary
The software sector has entered a bear market as the S&P North American Technology Software Index dropped 32% from its September high. The decline has been fueled by fears that artificial intelligence (AI) could disrupt the industry, reducing demand and profit margins. Despite this sell-off, experts argue it may be overreacting. Nvidia CEO Jensen Huang, for instance, believes the market is being too indiscriminate, as many software companies are actively integrating AI into their products to enhance offerings and stay competitive.
The release of AI-powered tools like Anthropic's Claude Cowork plugins has heightened concerns. These tools automate tasks across various departments, potentially replacing traditional software solutions. While this could pose a threat to legacy systems, it also creates opportunities for forward-thinking companies that can adapt and incorporate AI capabilities into their products.
Wall Street strategists, including JPMorgan Chase's Kriti Gupta, suggest that the current sell-off may not reflect the full picture. While there are risks associated with AI disruption, many software firms are leveraging AI to innovate and maintain relevance. Investors should consider a patient, long-term approach, as the current market conditions could present buying opportunities for undervalued stocks.
For finance enthusiasts, this situation highlights the importance of understanding emerging technologies like AI and their impact on traditional industries. While there is no guarantee that all software stocks will recover, those with strong AI integration strategies are likely to emerge stronger from this downturn. Patient investors who can identify such companies may see significant returns as the market stabilizes and these firms regain their footing in a rapidly evolving landscape.
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Originally published on The Motley Fool on 2/24/2026