Why are software stocks seeing increased earnings estimates despite AI disruption fears?

Software stocks are experiencing increased earnings estimates because their recent earnings results have exceeded consensus expectations, leading analysts to revise forward estimates upward.

What are the projections for hyperscaler capital expenditure in 2026?

Analysts expect capital expenditure by hyperscalers in 2026 to be 22% above estimates from the start of the earnings season.

Which technology stocks are experiencing the strongest earnings per share revisions?

Earnings per share revisions have been strongest for mega-cap technology stocks.

Home / Business and Economy / AI Fears Ignored: Software Stocks Surge on Strong Earnings

AI Fears Ignored: Software Stocks Surge on Strong Earnings

16 Feb

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Summary

Software stocks see 5% EPS estimate rise over three months.
Hyperscaler capex in 2026 predicted 22% above initial forecasts.
Mega-cap tech stocks show the most significant EPS revisions.

AI Fears Ignored: Software Stocks Surge on Strong Earnings

Analysts are revising earnings estimates upward for software companies, seemingly undeterred by recent selloffs driven by artificial intelligence disruption concerns. Over the past three months, two-year forward earnings estimates for software stocks have increased by 5%. Industries previously thought to be most vulnerable to AI advancements have nonetheless seen positive revisions to their 2026 earnings-per-share projections.

These companies have also reported double-digit growth in their fourth-quarter earnings. This performance contradicts the widespread "AI fear trade" that has impacted various sectors, causing a significant plunge in stocks perceived to be at risk from AI.

Meanwhile, the substantial investment required to build the infrastructure powering AI tools shows no signs of slowing down. Analysts now anticipate that capital expenditure by major cloud providers, known as hyperscalers, in 2026 will be 22% higher than estimates at the beginning of the current earnings season. These revisions to earnings per share are most pronounced for the largest technology stocks.

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