Software Stock Sell-Off Deemed ’Too Harsh’ as AI Fears Overblown, Jefferies Says
Software stocks plunged last week amid fears that AI startups and "vibe coding" could disrupt the industry, with the iShares Expanded Tech-Software Sector ETF (IGV) dropping 8%—extending its year-to-date decline to 22%. Jefferies analysts argue the sell-off was exaggerated, comparing current sentiment to the 2008 financial crisis and dot-com crash.
While investors worry AI adoption will erode software margins, Jefferies sees opportunity in companies leveraging their data pools for AI transformation. "The negative sentiment is reaching extreme levels," the firm noted, suggesting the market has prematurely written off incumbents.
Monday's rebound in software stocks underscored the sector's volatility. The report highlights a growing divide between AI HYPE and measurable impact—a tension increasingly relevant to crypto projects integrating AI features.
