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Is the inventory market going to crash? It might sound a wierd query to ask, given the S&P 500 and FTSE 100 are each nonetheless using excessive.
Nonetheless, all’s not properly below the floor, with the software program element of the S&P 500 down by round 30% since October. This has been dubbed the ‘SaaSpocalypse’.
In the meantime, FTSE 100 knowledge firms reminiscent of Experian, Sage (LSE:SGE), London Inventory Trade Group, and RELX haven’t been spared. All have bombed 35% or extra over the previous yr.
In keeping with Deutsche Financial institution, this sudden sell-off has echoes of the early levels of the dotcom bubble bursting. In March 2000, tech shares began declining whereas different sectors rallied for a couple of months. That is what’s taking place now.
Again then, virtually every part ultimately went south, together with non-tech shares like McDonald’s.
Portfolio ache
Like most traders, my portfolio hasn’t escaped unscathed. Axon Enterprise, which has a cloud enterprise that shops digital proof and provides effectivity instruments for regulation enforcement companies, and gaming platform Roblox have been hit laborious.
So too has e-commerce software program supplier Shopify and language studying chief Duolingo. In the meantime, smaller holdings together with Salesforce and Cloudflare have tumbled, together with cybersecurity chief Crowdstrike.
To some extent, I used to be ready for this. One yr in the past, I wrote: “More than ever, I think it’s crucial to make sure the software/tech companies we’re invested in aren’t vulnerable to being disrupted by AI. The technology is likely to cause as much value destruction as creation.”
I’m assured that the majority of those companies will profit from AI know-how moderately than be disrupted by it. Particularly Shopify, Axon, CrowdStrike and Cloudflare.
I’m not saying every is instantly value contemplating, as all of them have their very own dangers. However having confidence of their enterprise fashions, aggressive positions and prospects helps me to remain affected person throughout this era of large volatility.
Even when the market crashes, I’m not promoting any of my shares.
Alternatives galore
Recently, we’ve seen an accelerating rotation out of software program firms deemed weak to AI disruption. Anthropic has geared up its Claude Cowork AI agent with new instruments that permit it to carry out complicated workflows – the sorts of duties many specialised software program suppliers promote as their bread-and-butter merchandise.
The largely indiscriminate nature of the sell-off has created many alternatives, for my part. One may very well be Sage, whose shares have crashed over 20% yr to this point.
The agency offers business-critical accounting and payroll software program for small- and medium-sized enterprises (SMEs). The corporate has over 2m clients, so AI may very well be a theoretical future threat if companies depart to save cash.
In actuality nonetheless, accountants at medium-sized companies are risk-averse. I critically doubt they’re going to ditch a trusted, compliant system for a brand new unproven AI instrument. And even entrepreneurs at small companies take recommendation from their accountants.
Furthermore, Sage has rolled out its personal Copilot, an AI assistant designed to automate tedious duties like chasing invoices and producing monetary reviews. In Q1 2026, natural income grew 10% £674m, with spectacular 13% progress recorded in North America.
After the crash, Sage inventory’s buying and selling at a ahead earnings a number of of 15 (for FY27). That appears far too low for a high-quality and rising firm like this, main me to imagine this can be a FTSE 100 dip-buying chance value taking critically.
