As of Wednesday, software stocks are still going down, even though Wall Street is more optimistic about the chip sector.
At the end of June, investors seemed to be moving some of their money out of semiconductor stocks and into the software sector. However, that trend has stopped this week, with several chip-sector indicators on track for record closes and the iShares Expanded Tech-Software Sector ETF IGV heading for its third straight session of losses.
CrowdStrike Holdings Inc. shares, which have been one of the best performers in the S&P 500’s first half, are down 4.6% today, making them the second-worst performers in the index.
Okta Inc. OKTA, -1.95% (down 2.7%), Snowflake Inc. SNOW, +0.03% (down 2.7%), and Salesforce Inc. CRM, +0.06% (down 1.9%), are some other software stocks that fell sharply on Wednesday. Intuit Inc. (INTU, -2.57%) shares are down 3.8% after the tax software company said it would be laying off a lot of people and hiring more people in hot fields like artificial intelligence.
At the most recent check, Salesforce stock was down 1.9%, making it the worst-performing stock on the Dow Jones Industrial Average (DJIA).
Jordan Klein, a desk-based analyst at Mizuho, pointed out a few things this week that might be scary for investors in the software sector. The stock of “well-owned and loved” ServiceNow Inc. was downgraded, which led to an 8.6% drop in that name over the last three days. Then, Dassault Systemes SE DSY, -0.15%, a French company that makes design software, made a negative preannouncement because of problems with closing deals in some international markets.
At the same time, he wrote that the “FOMO” trade, which stands for “fear of missing out,” is back on in the chip sector. This means that investors may be afraid to sell recently undervalued stocks like Intel Corp. INTC, +0.81%, and they are also looking forward to Nvidia Corp.’s NVDA, +2.69% next earnings report in August.
Investors with a brain should feel good about Nvidia’s August guidance for the October quarter. Klein wrote that the company’s comments about the January quarter, when Blackwell and Grace Blackwell systems ramp up even more, could also be very bullish. “That sounds like a bad deal to me.”
At noon, Nvidia shares are up 2.3% and getting closer to their all-time high of $135.58. A short time ago, the stock changed hands for $134.43.
The PHLX Semiconductor Index SOX is up 1.6% so far today to 5,858.58 and is on track to close at a new high.
