The software sector just experienced something I’ve never seen before: a complete business model repricing in real-time. We’re not talking about a few bad earnings reports. We’re talking about companies beating estimates and getting obliterated anyway.
The Carnage
Software stocks just endured their worst week since 2008. The numbers are staggering:
IGV (iShares Software ETF) down 24% to start 2026
Salesforce down 29% YTD
Oracle down 60% from September highs
Palantir down 36% from November highs
Microsoft lost $400 billion in market cap on an earnings beat
The sector is now at its most oversold level since 2018. 73% of software stocks are classified as oversold. That’s the highest level on record. Six years of relative gains versus the S&P 500 have been wiped out.
Software vs. S&P 500: The 4-week rate of change says it all.
The entire sector is getting crushed. It’s not just a few names or this isn't selective selling. Look at the bottom 20 names: All down 20-40%+.
The Catalyst