Tradeable bounce is developing in software stocks, Raymond James says

Investing.com -- Raymond James told clients in a note Thursday that software shares appear to be finding their footing after a steep two-month selloff, with the S&P 500 Software Industry Index attempting to stabilise near “major technical support.”

The firm highlighted a potential tradeable counter-trend bounce as the group approaches the confluence of 6,156.06 and the 200-week moving average, a level that previously provided support during the 2025 “Tariff Tantrum.”

According to Raymond James analyst Javed Mirza, the setup suggests that seller enthusiasm is diminishing, citing declining volume over the past fortnight.

The firm sees an initial upside target near 6,573.85, or roughly 4.5% above current levels, with a multi-day close above that threshold potentially opening the way for an intermediate rally toward 7,180.65, representing another 14.2% rise.

Notably, Mirza pointed to Microsoft, Oracle, Palantir, Salesforce, AppLovin, and Intuit as six major software names that appear poised for a rebound.

However, the firm stressed that hardware stocks continue to show stronger momentum. The S&P 500 Technology Hardware & Equipment Industry Index has already broken above key resistance, with a monthly close likely confirming a breakout to new all-time highs.

Raymond James believes the diverging trends reinforce an ongoing rotation of weakening software technicals versus strengthening hardware.

While the near-term bounce in software looks increasingly viable, the firm argues that hardware’s long-term relative outperformance is likely to persist

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