JPMorgan strategists predict rebound for technology stocks

JPMorgan’s equity strategy team, led by Dubravko Lakos-Bujas, is telling investors to stop panicking about artificial intelligence eating the software industry alive. Their latest analysis argues that fears of AI disrupting traditional software businesses are “largely exaggerated,” and that the recent selloff has created a buying opportunity in high-quality tech names.

The strategists project annual profit growth of 16.8% for the software industry by 2026, a figure that doesn’t exactly scream existential crisis. Their recommendation: increase exposure to software firms with strong fundamentals and resilience to near-term AI headwinds.

The case against AI doom

JPMorgan’s team points to structural advantages that established software companies hold, particularly high switching costs and long-term client contracts. When a Fortune 500 company has spent years integrating a platform into its operations, ripping it out for an AI alternative isn’t a weekend project.

Two names stood out in the JPMorgan report: Microsoft and CrowdStrike. Both were highlighted not as victims of the AI revolution, but as beneficiaries of it. Microsoft has been embedding AI capabilities across its product suite since its multi-billion-dollar OpenAI partnership. CrowdStrike, the cybersecurity firm, operates in a space where AI augments rather than replaces the core product.

Semiconductors and AI infrastructure

JPMorgan’s ongoing research throughout 2026 has focused on rotations within the tech market, identifying semiconductors and AI infrastructure as sectors with significant upside potential. Semiconductors, in particular, hit oversold conditions that JPMorgan flagged as ripe for a rebound.

JPMorgan isn’t alone in this assessment. Other major financial institutions, including Morgan Stanley, have maintained positive outlooks on the broader US technology sector.

What investors should watch

The key variable in JPMorgan’s analysis is quality. The firms best positioned for a rebound share specific characteristics: recurring revenue models, deeply embedded products, pricing power, and the ability to integrate AI into their existing offerings rather than compete against it.

That 16.8% projected annual profit growth figure for the software industry is an aggregate number. Individual companies will deviate significantly from that average. Some will exceed it by wide margins as they layer AI features onto existing subscription revenue. Others, particularly those selling commoditized tools that AI can easily replicate, may see growth stall or reverse entirely.