Dan Ives Says Software Stocks Just Saw Their Most Disconnected Sell-Off Since the Late 1990s. Here's Why He's Still Bullish.
2026-08-05 16:30
•John Ballard •The Motley Fool
••••• ••• Axe Cap view
Software Stocks’ Sell-Off: A Buying Opportunity or a Trap?
Strong earnings and AI momentum contrast sharply with recent heavy selling in top software names.
The recent tumble in big software stocks like Microsoft, ServiceNow, and Salesforce feels oddly detached from their earnings and growth stories. Microsoft’s Azure cloud and AI offerings are driving solid 18% revenue growth, yet its stock lags while broader tech is rallying. ServiceNow and Salesforce showcase similar trends, with subscription revenue growth and record AI-related contracts. Heavy investment in AI infrastructure is a clear near-term drag, but these firms are building a moat for future earnings. For South African investors, the closest lens is how this pressure on global tech could keep pressure on the rand, which remains sensitive to shifts in the US tech sector’s fortunes. The disconnect suggests the market is still wary about growth vs. AI cost trade-offs. If that fear abates, these stocks – and by extension the rand – could rebound sharply. But if AI spending slows or competition intensifies, the correction may deepen. this is just our opinion and not financial advice
I’d watch these names for better entry points, but remain cautious; local investors might trim rand exposure as global tech volatility persists. Keep some cash ready to buy if AI momentum overtakes near-term headwinds.
- USD/ZAR
- MSFT
- NOW
- CRM
- AI investment costs rise further
- global tech valuations fall sharply
6/10
Tech analyst Dan Ives argues that the recent sell-off in major software stocks is disconnected from business fundamentals. Despite share price declines, Microsoft, ServiceNow, and Salesforce are reporting strong revenue growth and momentum in AI-related products. While heavy AI infrastructure spending and potential competition from AI agents pose near-term headwinds, analysts maintain long-term earnings growth estimates, suggesting the sell-off presents a buying opportunity.
Our take is based on reporting first published by The Motley Fool.