Software stocks have had a punishing few weeks. The sector has shed roughly $2 trillion in market value since the start of 2026, dragging down some of the most recognized names in enterprise technology.

The selling accelerated after Anthropic launched new industry-specific plugins for its Claude agent platform, reigniting fears that autonomous artificial intelligence tools could hollow out the core businesses of traditional software companies.

Salesforce (CRM) and Adobe (ADBE) bore the brunt of it, with the iShares software ETF (IGV) trading more than 20% below its 200-day moving average at the worst of the selling.

JPMorgan is pushing back hard. The bank’s strategists say the market has overreacted and that investors willing to look past the noise may be staring at one of the better entry points in years for quality software names.

JPMorgan says the market is pricing in a disaster that is years away

JPMorgan’s latest private bank note argues that investors are pricing in worst-case AI disruption scenarios that are unlikely to materialize anytime soon.

The damage has been historic. The software sector’s weight in the S&P 500 has dropped from 12% to 8.4%, and the S&P 500 Software Index’s relative strength index recently hit 18, a reading last seen at the tail end of the dot-com crash.

In JPMorgan’s view, full agentic AI replacement of enterprise software is a post-2028 story at the earliest. Current tools augment workflows. They do not replace them. The fear is real. The timeline investors are attaching to it is not.

Why enterprise software is stickier than the panic suggests

One factor investors appear to be discounting is how deeply embedded enterprise software really is. Multi-year contracts, high switching costs and mission-critical workflows do not disappear because a new AI tool launched last month.

Wedbush Securities analyst Dan Ives called this the most structurally baffling selloff he has seen in 25 years on Wall Street. In a post on X, Ives said he views the dip as a golden buying opportunity and that the selloff is the most disconnected tech trade he has seen in his career.

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The irony, JPMorgan notes, is that the software companies investors are fleeing are themselves becoming AI beneficiaries. Corporate AI users are already seeing the positive impact in their margins, with net margins for S&P 500 AI-adopting companies running at 16.4% versus 13% for those outside that group as of February 2026.

4 reasons JPMorgan says to buy the dip now

The bank lays out a clear framework for why the risk-reward in quality software names has shifted in favor of buyers:

The bull case for software right now

• Timeline mismatch. Full AI agent replacement of software-as-a-service (SaaS) workflows is a post-2028 story. Copilot-style features dominate enterprise AI today, not wholesale replacements.
• Sticky revenue. Leading SaaS companies carry net retention rates near 90%. Customers do not just stay, they expand their spending year over year.
• AI as a tailwind. Software companies are embedding AI to cut their own costs and boost margins, making the technology a growth engine rather than just a threat.
• Valuation reset. Forward earnings multiples have compressed from roughly 40 times to around 25 times. Free cash flow yields on quality names have climbed above 4%.

What the data says about enterprise AI adoption

The strongest counterargument to the doomsday narrative may be Salesforce’s own numbers. The company’s Q4 earnings show Agentforce’s annual recurring revenue hit $800 million, up 169% year over year, with 29,000 total deals closed.

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That does not look like a company being disrupted out of existence. Salesforce closed fiscal 2026 with $41.5 billion in total revenue, up 10% year over year, and guided for $45.8 billion to $46.2 billion in fiscal 2027.

Meanwhile, Anthropic itself is deepening its software partnerships rather than dismantling them. The company’s Claude and Slack integration frames its AI as a productivity layer built on top of existing tools, not a substitute for them.

The risks investors still need to weigh

JPMorgan is not dismissing the risks. Agentic AI could mature faster than expected. Startups without legacy overhead could erode the margins of established players. A broader economic slowdown would squeeze information technology budgets across the board.

The bank’s base case, however, is that fundamentals will reassert themselves. Short interest in software sits at record levels and sentiment has swung to an extreme that has historically preceded a recovery, according to JPMorgan’s analysis.

For investors with the patience to look past the fear, JPMorgan’s message is clear. The market threw out quality names alongside the speculation. Picking up what got left behind may be the trade of 2026.

Related: JPMorgan revamps AI ‘stocks to buy’ list ahead of earnings