Why software stocks proved resilient on a dismal day for tech

By Hannah Pedone and Emily Bary

Even as the Nasdaq slides into correction territory, shares of prominent software companies like Salesforce, CrowdStrike and Figma finish the session higher

Salesforce shares closed higher on Thursday.

Software stocks were a bright spot Thursday as many other corners of the technology sector struggled.

In a session where the tech-heavy Nasdaq Composite Index COMP entered correction territory, closing at its lowest point since September, a number of prominent software stocks actually finished the day in the green. Salesforce's stock (CRM) rose 2%, while Figma (FIG) rose 5% and Snowflake (SNOW) moved 1% higher.

Even as the iShares Expanded Tech-Software Sector ETF IGV and the Amplify Cybersecurity ETF HACK fell fractionally on the day, those performances were better than the 2.4% decline for the Nasdaq.

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There are a few reasons that software stocks outperformed, according to analysts. For one, D.A. Davidson's Gil Luria said the war in Iran could be giving a boost to the cybersecurity sector.

The longer the Iran conflict goes on, the more important cybersecurity companies will become, he told MarketWatch. Meanwhile, other types of technology companies, which have greater exposure to industrial and consumer activity, may be hit harder by rising oil prices. That makes software stocks relatively more attractive.

There was also the RSA cybersecurity conference this week, noted Wedbush analyst Daniel Ives. While cybersecurity stocks have been choppy over the course of the week, Ives told MarketWatch he came out of the event with a positive view: "It was clear from our perspective that cybersecurity budgets are going to increase dramatically because of AI."

Shares of CrowdStrike Holdings (CRWD) and Palo Alto Networks (PANW) both finished about 2% higher on Thursday. Fortinet's stock was up nearly 3%, and all three ranked among the top 10 performers in the Nasdaq 100 index NDX.

Another factor to consider is that software stocks, in recent months, had become popular bearish bets among short sellers who expected further declines due to artificial-intelligence disruption. Now analysts say some short sellers have been moving to cover their bearish software positions while also locking in gains linked to winning bullish trades, like those involving memory and optical components.

More from MarketWatch: Adobe's stock may not be an 'AI loser,' but this analyst sees a number of reasons to steer clear

That could be driving some short-term gains for software stocks, but whether the positive sentiment will last is another story.

"The buy side frequently reminds us to 'never confuse a momentum unwind day with a real bid in software,'" wrote Jeffrey Favuzza, a trading-desk analyst with Jefferies, in a note to clients.

Favuzza flagged that one prominent software stock remained "stuck in the mud" despite gains elsewhere in the sector. He was referring to Oracle (ORCL), which generates revenue both from selling software and from providing cloud services. Favuzza has been hearing from investors that Oracle's stock has been dragged down in sympathy with shares of neocloud providers CoreWeave (CRWV) and Nebius Group (NBIS), which each lost about 8% in Thursday's session.

See also: Microsoft's stock is having its worst quarter in 17 years - and there may be no quick fix

-Hannah Pedone -Emily Bary

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03-26-26 1754ET