By Doug Busch
Software stocks struggled in 2025, lagging the market and, in particular, the semiconductor group which captured the bulk of technology leadership. The iShares Expanded Tech-Software Sector ETF rose a scant 5% last year while the VanEck Semiconductor ETF surged nearly 50%. For those expecting a quick reversion to the mean in 2026, early returns offer little encouragement. Two weeks into the year, software is already down 2% while semiconductors are 9% higher.
Trends can persist longer than many expect, and some of the megacap software leaders will need to start pulling their weight if the group is to regain leadership. Microsoft, the largest holding in the iShares software ETF at nearly 9%, is still working through the aftermath of a four-week skid into late November that erased nearly 100 points from the stock. Oracle offers an even starker example, having lost roughly half of its market value from September to December. Adobe, another of the ETF's 10 largest holdings, printed a new 52 week low Tuesday, falling more than 5%.
But periods of weakness often create opportunity for those willing to look beneath the surface. As 2026 begins, selective software names are showing pockets of resilience and relative strength, finding potential support and suggesting that leadership within the group may be narrow, but not absent. Palantir, up more than 170% over the past year, is one such name even as it remains roughly 14% below recent 52-week highs near the very round $200 level. AppLovin and MongoDB have rallied by roughly 100% and 69%, respectively, over the last year. CrowdStrike, which I wrote about last week, also seems to be stabilizing.
Three other names could flex their muscles in 2026.
Strategy, the software company turned Bitcoin play, was certainly glad to put 2025 in the rearview mirror, having lost more than 50% over the year. The stock is now roughly 68% below its November 2024 high, where it was soundly rejected just above the very round $500 level. One notable development, a director made the first insider purchase since 2022, signaling some confidence at the corporate level.
The stock is lower 11 of the last 14 weeks. I frequently like to mention there is no reason to buy a falling knife until a technical catalyst presents itself. That signal may have arrived on the weekly chart via a doji candle at the 50 week simple moving average. Notice in the first quarter of 2024 two dojis near that line was the start of a firm uptrend. I think a purchase here offers good risk/reward and a double bottom base could be starting in a pattern that started in late 2024 with a bearish shooting star and doji. I think the stock can travel toward $300 by mid 2026 which would be a gain of 73% from current prices. Remain bullish above $154.
Strategy was trading around $183 Wednesday.
CoreWeave, a software company that went public last March, has certainly felt the drag of a fragile software sector. The stock now trades roughly 53% below its most recent 52-week high. This week, however, it is up 9% heading into today's trading. That positions CoreWeave for a three-week winning streak, its first since a six-week surge in June that saw a remarkable 253% total gain.
On its weekly chart, one can see how influential the candles have been. In November and December, the stock recorded a doji candle and a bullish hammer. Both are reliable indicators that selling pressure is abating. Indeed, last June a doji correctly predicted a change from the prevailing direction after a strong run following the IPO. If strength can materialize, a double bottom base is setting up. Enter here and the stock can run toward $155 in the second half, which would represent an advance of 68% from current prices. Remain bullish above $77.
CoreWeave was trading around $88.50 Wednesday.
Zeta Global Holdings has been a software standout. The stock is up roughly 10% year to date and has surged 133% from its early-April lows to last week's highs. On the weekly chart, Zeta appears poised to break above a bullish inverse head-and-shoulders pattern, signaling potential for further upside.
On its daily chart, Zeta is acting well after a breakout above a double bottom pivot at $20.73 from Dec. 30. Issues crept in with a doji candle on Feb. 18, which preceded a decline into the April lows before a bullish hammer on April 21 offered a compelling risk/reward long setup. The stock is riding its 21-day exponential moving average higher, while the 50-day simple moving average is sloping upward. A potential entry would be on a gap fill at $22 from Jan. 5, with a target near $30 by mid-2026, representing roughly 33% upside from current levels. Remain bullish above $19.50.
Zeta Global Holdings was trading around $22.50 Wednesday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 14, 2026 11:00 ET (16:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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