Raymond James told clients in a note Thursday that software shares appear to be finding footing after suffering a steep two-month selloff, as the S&P 500 Software Industry Index attempts to stabilise near what the firm described as "major technical support."
The firm highlighted a setup that suggests a potential tradeable counter-trend bounce as the software index approaches the confluence of 6,156.06 and the 200-week moving average, the same level that previously provided support during the 2025 "Tariff Tantrum."
Analyst Javed Mirza at Raymond James said the pattern indicates that seller enthusiasm is fading, pointing to declining volume over the past fortnight as evidence of cooling selling pressure.
Raymond James set an initial upside objective near 6,573.85, which the firm noted is roughly 4.5% above current levels. The note explained that a multi-day close above that threshold could clear the way for an intermediate rally toward 7,180.65, a level that represents an additional 14.2% advance from the initial target.
Mirza specifically identified six large software-related names that appear positioned for a rebound under this scenario: Microsoft, Oracle, Palantir, Salesforce, AppLovin, and Intuit.
At the same time, Raymond James stressed that hardware stocks are showing comparatively stronger momentum. The firm pointed to the S&P 500 Technology Hardware & Equipment Industry Index, which has already broken above key resistance. Raymond James said a monthly close is likely to confirm a breakout to new all-time highs for that hardware index.
The firm interprets these diverging patterns as evidence of an ongoing rotation: weakening software technicals versus strengthening hardware. While the near-term bounce in software looks increasingly viable under the technical setup and declining selling volume, Raymond James argues that hardware's long-term relative outperformance is likely to persist.
This view sets up a market backdrop in which software may offer a tradeable rebound from established support levels, even as investors continue to favour hardware names that have already cleared resistance and are trending toward new highs.