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Macro Intelligence
AI-driven disruption challenges top software stocks
In this week’s edition of IG Macro Intelligence, we examine the investing outlook for AI-related stocks, amid concerns that disruption in the space could affect current players.
As this Bloomberg chart shows, a Morgan Stanley index tracking software stocks is down 15% already in 2026, while the Nasdaq 100 iIndex flirts with all-time highs.
The release of a new AI tool has dampened sentiment, similar to the sell-off that was sparked at the beginning of 2025 when China’s DeepSeek entered the AI arena.
Henry Jennings from Marcus Today says the AI sell-off is starting to look like a horror show.
Code climbers
So, where to look for opportunity amid the downturn?
Claude Walker from A Rich Life says that overall, the disruption we’re witnessing in AI will allow for more competition, and the current downtrend is an opportunity to pick up high-quality names that are trading at a discount.
Pro Medicus (ASX:PME)
Walker favours Pro Medicus, which has fallen almost 16% so far in 2026 and is down around 30% over the past 12 months.
Pro Medicus daily candlestick chart
ASX Tradewatch data show shares in a long-term bearish trend confirmed by multiple indicators. Long-term, the 200-day moving average (MA) is falling and shows that demand for this stock is low.
In the nearer term, the 5-day MA is beneath both the 20- and 50-day MAs. This signals that investors see little opportunity in owning this stock at this time, but Walker is not worried.
Pro Medicus historical trends and price targets
Analysts are equally upbeat, with the average recommendation on the stock a 'buy' according to Refinitiv, with a price target of $326.49, suggesting upside of around 73% from current levels.
TechnologyOne (ASX:TNE)
TechnologyOne is another company analysts favour.
TechnologyOne daily candlestick chart
Most analysts are also upbeat on TechnologyOne – with the average target price around $35.60 suggesting a 30% rise from current levels.
Earnings watch
The next litmus test for investors will be earnings from some of the global heavyweights.
- Microsoft and Meta report on 28 January
- Google follows on 4 February
- Amazon reports on 5 February
- NVIDIA reports on 25 February.
Investors will be watching closely for 2026 commentary on capital spending from hyperscalers – major cloud and technology companies. Revenue growth at leading cloud providers will also be under scrutiny, particularly as markets evaluate returns on large-scale investments in AI data centre infrastructure.
Alex Pollak, Chief Investment Officer of Loftus Peak, has been invested in NVIDIA since 2016. He doesn't believe there's a bubble and is staying invested for now.
Magnificent 7 share price movement
Important to know
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