As AI Hype Fades, Software Stocks Drop 30%: Is It Time to Exit the Sector?
A shock absorbed by resilient markets
Despite this correction, Generali believes that the markets have overall absorbed the shock well. The environment remains supported by a combination of moderate growth, slowing inflation, and expectations of productivity gains linked to AI. In the United States, the GDP for the fourth quarter of 2025 grew at an annualized rate of 1.4%, a weakness Generali attributes to the impact of the « government shutdown, » while core PCE inflation stood at 3% year-over-year in December. In this context, uncertainties related to AI—particularly concerning the labor market and consumption—prompt more tactical caution in asset allocation.
Valuations have become attractive again in certain segments
The correction related to concerns about AI has led to a significant decrease in valuations in certain sectors, notably software, which is now considered more attractive according to several internal indicators from Generali. At the same time, market prospects remain constructive. Generali maintains a 12-month target for the S&P 500 between 7,000 and 7,300 points, with an upward potential reaching 8,000 points if earnings expectations are met. In the bond markets, the yield on the 10-year German Bund is expected to be around 2.95% over a one-year horizon.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
