The 2026 software apocalypse: 3 stocks down 25%+ to consider buying now, according to JP Morgan
With many software stocks down 25%+ from their highs, it may be time to consider buying. Thatâs the view of analysts at JP Morgan, who recently said that the decline in this area of the market is excessive and driven by AI disruption fears that are unrealistic.
Here, Iâm going to highlight three software stocks that JP Morgan highlighted in its research note as Buys. Are they worth considering today?
Microsoft
Letâs start with mega-cap Microsoft (NASDAQ: MSFT). It has fallen to $400 after trading near $550 in late 2025.
I like this pick. To my mind, this company is one of the safer picks in software.
Why? Because itâs a really diversified business.
Not only is it a key player in business productivity software, but itâs also a global leader in cloud computing and video gaming.
Additionally, itâs a massive player in AI itself. Because it has a large stake in ChatGPT owner OpenAI.
Of course, there are risks. One big one is that a lot of its expected cloud growth is tied to OpenAI (customer concentration risk).
With the stock now trading on a forward-looking price-to-earnings (P/E) ratio of 21 (using next yearâs earnings forecast) though, Iâm bullish. I plan to buy more shares for my own portfolio soon and believe itâs worth a look.
ServiceNow
Next up is ServiceNow (NYSE: NOW). It has fallen from $200 to $100.
This is another good call, in my view. While this company isnât very well known, itâs a really important player in the corporate world.
Today, it provides crucial operating software for a vast range of large companies (85% of the Fortune 500). From Apple to GSK, everyone is using its software.
In simple terms, it handles all the behind-the-scenes work. Think IT incidents, employee requests, and security cases.
Given how embedded its solutions are within large multinational companies, I doubt this company is going to be replaced by AI. Ultimately, I expect AI agents to work on top of its software.
A risk is pricing. Looking ahead, the group may have to adjust its pricing model as companies automate their operations and lay off staff.
I expect it to continue growing though. And with the P/E ratio now in the low 20s, I think itâs worth considering.
Zscaler
Finally, we have Zscaler (NASDAQ: ZS), a small, but fast-growing cybersecurity company. Its share price has fallen from $330 to $165 â a decline of about 50%.
Cybersecurity strikes me as an area of software that should be relatively immune to AI disruption. Because this is a really specialised field and I donât think that companies will be able to simply âvibe codeâ their own cybersecurity applications.
To my mind, it wouldnât be worth the risk. Get it wrong and the company could potentially be out of business if hit by a major attack.
Of course, while this company has been able to generate prolific growth in recent years (five-year revenue growth of 520%), there are no guarantees that this will continue. This is a dynamic industry and threats are likely to evolve over time.
Any slowdown could hit the share price. Because the stock is priced for strong growth.
Iâm bullish, however, and plan to buy more shares for my own portfolio in the weeks ahead. In my view, itâs worth a closer look.
The post The 2026 software apocalypse: 3 stocks down 25%+ to consider buying now, according to JP Morgan appeared first on The Motley Fool UK.
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Edward Sheldon has positions in Apple, Microsoft, JP Morgan, and Zscaler. The Motley Fool UK has recommended Apple, GSK, Microsoft, ServiceNow, and Zscaler. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
