Wedbush analyst Dan Ives is advising investors to buy the likely winners in the software sector as the market suddenly grapples with an exaggerated doomsday scenario for the group. Amid what he calls “Software Armageddon,” Ives thinks Microsoft , Palantir , CrowdStrike , Snowflake and Salesforce are the top stocks to own. “We believe the market is baking in a doomsday scenario for software companies in the near-term, which we believe is extremely overblown, as many customers won’t be willing to put their data at risk to capitalize on AI implementation strategies until there is less risk with these migration projects,” Ives wrote in a report Wednesday. Software stocks have struggled this year as investors worry that artificial intelligence tools will make the group’s “software-as-a-service” offerings obsolete. The sell-off gained steam this week after AI-startup Anthropic added new legal, finance and product marketing capabilities to its Claude Cowork agent. IGV .SPX YTD line IShares Expanded Tech-Software Sector ETF vs S & P 500 this year “Is AI a headwind in the near-term for software? YES! … However, the magnitude of this software sell-off is a major head scratcher and is factoring in an Armageddon scenario for the sector that is far from reality in our view,” Ives said. The analyst thinks many companies are too ingrained within their software systems, and that many will be reluctant to abandon vendors after spending so much on integrating software infrastructure. Anthropic and other AI providers such as OpenAI simply aren’t prepared to handle business transitions from software products. “New players … don’t have the current capacity to hold all enterprise data to power AI integrations and protect organizational data structures from malware,” he wrote. Shares of Ives’ recommended software stocks are down anywhere from 9% to 19% this week alone, and about 19% to 29% in 2026.
