If you have a heavy allocation to software stocks in your portfolio- Then you’ve likely seen a large drop in your portfolio over the last few months. But it isn’t just software stocks selling off. Many names across tech have also pulled back meaningfully over the past ~2 months, even after strong long-term runs. The message the market is sending is actually quite clear: 1. AI will be the downfall of software stocks 2. Tech companies are overspending on capex Whether or not you agree with that narrative, that is how the market is currently pricing the sector. On top of this, the shift toward AI is introducing meaningful risks that the market has not fully priced in yet, and investors need to be aware of them.