JPMorgan: AI Disruption Fears Overstated for Software Sector
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 13 2026
0mins
Should l Buy MSFT?
Source: Benzinga
- Market Rebound Expectations: JPMorgan believes that while the market's outlook on AI disruption in the software sector is overly pessimistic, certain software companies are demonstrating greater resilience, potentially providing rebound opportunities for investors, especially given the current overly bearish sentiment.
- Extreme Price Volatility: Analysts point out that the extreme price action in software stocks has led to unrealistic expectations regarding AI disruption, which may prompt a rotation back into higher-quality companies, thereby improving portfolio performance.
- AI Profitability Gains: Companies in the S&P 500 that have adopted AI have seen net margins expand by approximately 2 to 3 percentage points more than their peers, indicating that AI technology is already delivering productivity gains and reflecting that corporate adoption is enhancing profitability.
- ETF Performance Decline: The State Street SPDR S&P Software & Services ETF (NYSE:XSW) is down 20.58% year-to-date, illustrating the overall pessimistic sentiment towards the software sector, despite some companies potentially benefiting from AI infrastructure demand.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 409.410
Low
500.00
Averages
631.36
High
678.00
Current: 409.410
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- New Product Bundle: The E7 suite includes $30 for Copilot, $12 for Entra identity tools, and $15 for Agent 365, providing a comprehensive AI management solution that enhances companies' competitiveness in digital transformation.
- Increased Market Adoption: Microsoft’s commercial CEO Judson Althoff stated that the launch of E7 is expected to drive broader adoption of Copilot, which has yet to become common among commercial productivity users, indicating a growing demand for AI tools in the market.
- Competitive Pressure: This pricing and product update comes amid investor concerns about AI models from Anthropic potentially threatening established software companies, with Microsoft’s strategic adjustments aimed at solidifying its market position and addressing competitive challenges.
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- Founders' Background: Promptfoo's founders, Ian Webster and Michael D'Angelo, bring extensive industry experience, with Webster previously leading large language model engineering teams at Discord and D'Angelo serving as the former VP of engineering at Smile Identity, showcasing their technical expertise and industry insights.
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- Stable Returns and Low Fees: The ETF offers an attractive dividend yield of approximately 2.5%, significantly higher than the S&P 500's average of 1.2%, while maintaining a low expense ratio of just 0.09%, ensuring that fees do not erode investor returns.
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- Low Expense Ratio Advantage: The ETF charges a low expense ratio of just 0.09%, ensuring that investor returns are not significantly impacted by high fees, and its lower volatility (beta of 0.73) makes it an ideal choice for long-term holding.
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- No-Code Tool Application: The new tool will assist users in automating tasks such as drafting meeting notes, creating action items, and breaking down large projects into step-by-step plans, initially operating on unclassified networks with potential future expansion to classified environments, thereby enhancing the Department's operational capabilities.
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- Industry Tensions: Amid rising tensions in the tech industry regarding military AI usage, Google's AI chief and other employees have backed Anthropic's legal action against the Pentagon, highlighting growing internal concerns and dissent regarding military collaborations.
See More
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- Grid Efficiency Initiative: The coalition plans to collaborate with state lawmakers and regulators, leveraging research from The Brattle Group that indicates system improvements could save consumers up to $180 billion, significantly enhancing grid efficiency and reducing electricity costs.
- Hyperscaler Investment Surge: Morgan Stanley estimates that hyperscalers will spend over $1 trillion in 2025-2026, with power availability now being the single biggest constraint on expansion, which could hinder industry growth.
- Tesla's Market Opportunity: As more states adopt grid utilization policies, Tesla's energy storage division stands to benefit significantly, with its Powerwall and Megapack systems allowing homes and utilities to store and discharge excess energy during peak demand, enhancing commercial viability.
- Policy-Driven Progress: Utilize has successfully pushed through a first-in-the-nation bill in Virginia requiring utilities to report their grid usage, demonstrating the potential for policy to drive improvements in grid efficiency, and awaiting the governor's signature could further reform the electricity market.
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