Software sector drops 31% in three months, dragged down by leading companies' decline

Dassault Systèmes and Capgemini Lead the Industry in Their Wake

The downward trend is largely dictated by the giants of the sector. Dassault Systèmes, which alone accounts for over 23 billion euros in market capitalization, has dropped 30.4% over three months and is down another 2.4% this Thursday, at 17.22 euros. CAPGEMINI, the second largest capitalization in the sector with over 17 billion euros, is following the same path with a 1.8% decline during the session. Further down, QUADIENT (down 30.2% over three months) and Vusion are experiencing similar deviations with their long-term moving averages. Out of the 18 stocks in the sector, 13 are in the red this Thursday, while only four are up.
The market context hardly helps: the VIX is at 25.78, up nearly 7%, indicating a high level of tension fueled by geopolitical uncertainties in the Middle East—particularly the fragility of the ceasefire between Washington and Tehran and Israeli strikes in Lebanon. But beyond current events, it's also the potential disruption related to the rise of AI that seems to be cooling investors.

A Downward Trend Showing No Reversal Signs Yet

The technical outlook for the sector remains bleak. The market-cap-weighted average price is significantly below its 50 and 200-day moving averages, confirming a medium to long-term downtrend. The sector's RSI at 46.6 is in a neutral zone — neither oversold nor overbought — which a priori rules out any imminent technical rebound signal. The only potentially favorable factor: the weighted MACD has moved back above its signal line, indicating the beginning of a slowdown in selling pressure.

However, this flicker of hope is fragile given the extent of the correction experienced. The nearly 38-point performance gap with the CAC 40 over three months illustrates a massive sectoral rotation, to the detriment of software technology. At this point, technical data does not support the conclusion of a bottom: the movement is more akin to a sustained downtrend rather than just a corrective phase. The current environment of high volatility and geopolitical tensions also offers no identifiable catalyst that could reverse this trajectory in the short term.