JPMorgan Sees Buying Opportunity in Software Stocks After Historic Drawdown
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 10 2026
0mins
Should l Buy SNOW?
Source: CNBC
- Market Drawdown Analysis: JPMorgan highlights that the software sector has experienced the largest non-recessionary 12-month drawdown in over 30 years, with a market capitalization loss of $2 trillion, reducing its weight in the S&P 500 from 12% to 8.4%.
- Investment Opportunity Identification: Despite the turmoil caused by AI threats, JPMorgan believes the market has overreacted, with current valuations reflecting worst-case scenarios that are unlikely to materialize, especially in the next three to six months.
- Short-term Trading Strategy: The strategist notes that short interest in software stocks is at record levels, while a preference for AI semiconductors skews the risk balance towards an imminent rebound, prompting a recommendation for investors to increase exposure to high-quality software companies.
- Recommended Stock List: JPMorgan's rebound candidates include Microsoft, Snowflake, CrowdStrike, Zscaler, and ServiceNow, with Microsoft showing little change over the past 12 months but down 14% in 2026.
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Analyst Views on SNOW
Wall Street analysts forecast SNOW stock price to rise
33 Analyst Rating
30 Buy
3 Hold
0 Sell
Strong Buy
Current: 136.470
Low
237.00
Averages
278.19
High
312.00
Current: 136.470
Low
237.00
Averages
278.19
High
312.00
About SNOW
Snowflake Inc. is a data cloud and artificial intelligence company. Its platform is the technology that powers the AI Data Cloud, enabling customers to consolidate data into a single source of truth to drive meaningful insights, apply artificial intelligence (AI) to solve business problems, build data applications, and share data and data products. It provides its platform through a customer-centric, and consumption-based business model. Its cloud-native architecture consists of three independently scalable but logically integrated layers across compute, storage, and cloud services. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data to create a unified data record. Its ClearQuery platform allows users to rapidly search, explore, and analyze their data using natural language queries.
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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- Historic Contract Signings: The company signed its largest contract in history valued at over $400 million in the previous quarter, along with seven contracts exceeding $100 million, a substantial increase from just two in the prior year, which will significantly boost future revenue growth.
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- Historic Large Contracts: The company signed its largest deal in history valued at over $400 million in the previous quarter, along with seven contracts exceeding $100 million, showcasing its success in securing large transactions that are expected to drive future revenue growth.
- Strong Earnings Improvement: Earnings per share surged by 50% in fiscal 2026 to $1.25, reflecting the company's ability to win more business from existing customers, which further enhances its profitability.
- Massive Market Potential: The AI analytics platform market is projected to grow from $28 billion last year to $220 billion by 2035, providing Snowflake with substantial growth opportunities, making it an attractive investment despite a one-third decline in stock value in 2026.
See More
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- Historical Lessons: High-profile IPOs often see strong initial performance, but subsequent market behavior can be disappointing, as seen with Palantir and Snowflake, whose stock prices fell significantly post-IPO, highlighting the need to focus on actual financial performance.
- Investor Psychology: The initial surge in IPO prices typically reflects market optimism about future growth, but this optimism can lead to significant price volatility when lacking fundamental support, posing risks for investors.
- Importance of Patience: While some exceptional companies like Palantir eventually recover, investors must possess patience and conviction; SpaceX's lofty valuation may hinder short-term profitability, suggesting that waiting until after the IPO for clearer financial assessments is prudent.
See More
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- Capex Plans: Google, Amazon, and Meta are projected to spend $200 billion on capital expenditures in 2023, a more than 50% increase from 2025, reflecting their commitment to AI infrastructure despite challenges from rising oil prices and memory shortages.
- Memory Crisis Intensifies: The global memory shortage has driven Micron's stock up over 550% in the past year, placing significant cost pressures on tech companies as they strive to meet data center demands, potentially impacting future profitability.
- Rising Energy Costs: Diesel prices have surged approximately 42% since the onset of the Iran war, directly affecting operational costs for data centers and forcing companies to factor in higher energy expenses when constructing new facilities.
- Market Confidence Remains: Despite uncertainties, investor confidence in the AI sector remains strong, with Nvidia's stock hitting record highs, indicating a bullish outlook on tech giants' investments in AI.
See More
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- IPO Potential: SpaceX is planning a record IPO with a projected valuation of up to $1.75 trillion, which, if successful, would make it the largest IPO in history, reflecting strong market confidence in its future growth.
- Diversified Business: In addition to rocket launches, SpaceX owns the Starlink satellite internet service and the AI business xAI, which merged with SpaceX at a valuation of $1.25 trillion, further strengthening the company's market position.
- Retail Investor Opportunities: SpaceX plans to allocate a significant portion of shares for retail investors, although specific arrangements are not yet clear, this move could make it easier for ordinary investors to participate in the IPO, breaking the traditional focus on institutional investors.
- Historical Insights: Historical data shows that many tech companies experience price fluctuations post-IPO, indicating that investors often find multiple reasonable entry points after the market debut, suggesting that there is no need to rush into the SpaceX IPO.
See More
