While Wall Street is betting against software, retail investors have poured in — and done well

MarketWatch

by Barbara Kollmeyer

February 19, 2026

AI-Generated Deep Dive Summary

Retail investors are making waves in 2026 by doubling down on software stocks despite Wall Street’s cautious stance. While professionals have been hesitant due to concerns over AI risks, tariffs, and broader market uncertainty, individual investors have shown remarkable resilience, stepping into beaten-down sectors where experts have pulled back. This trend reflects a growing divide between retail and institutional investors, with Main Street often betting against Wall Street’s conventional wisdom. Last year, retail investors outperformed professionals by entering the market when fear and uncertainty caused professionals to retreat. The same pattern is emerging in 2026, as individual traders are showing renewed interest in software stocks, which have been hammered by worries about slowing growth and regulatory scrutiny. According to strategists at JPMorgan and Citadel Securities, retail investors’ behavior suggests they are less swayed by short-term fears like AI-related concerns, instead focusing on long-term opportunities. This dynamic is significant because it highlights a shift in investor sentiment that could reshape markets. Retail investors have historically been seen as less sophisticated, but their willingness to take risks when professionals are cautious has paid off. In 2023, for instance, retail traders helped fuel the “meme stock” phenomenon, demonstrating the power of grassroots investing movements. The rise of retail investors as a force to be reckoned with underscores broader trends in finance. The increasing accessibility of online trading platforms and real-time market data has empowered individual investors to make informed decisions that challenge traditional investment strategies. This shift not only challenges Wall Street’s dominance but also signals a potential long-term rebalancing of power between institutional and retail investors. For readers interested in finance, this story matters because it highlights the evolving landscape where retail investors are no longer just passive participants but active drivers of market movements. Their ability to outperform professionals in challenging markets suggests that traditional investment models may need to adapt to stay competitive. As 2026 unfolds, the interplay between Main

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Originally published on MarketWatch on 2/19/2026