Microsoft is One of Six Stocks on Wells Fargo's Software List


Software shares are taking it on the chin, with the S&P Software & Services Select Industry Index, dropping 24% thus far this yr. So what’s occurring?

“Following a year of underperformance in 2021, the software sector has gotten off to a rocky start in 2022, as questions around rising rates and valuation levels have morphed into concerns around impacts of a potential recession,” Wells Fargo analysts wrote in a commentary.

“We remain selective with our ratings and recommendations—favoring those companies with more tangible valuation backstops and identifiable catalysts ahead, alongside vendors best able to lean into return-on-investment-based selling.”