18 Feb 18th February 2026

Markets Year to Date

We have seen an incredible amount of back and forth in the markets since mid-December. Take a look at this chart of the S&P with nice little arrows to show what I mean.

Whereas from 2022 to 2025 AI caused all Tech and Tech related stocks to boom, it has suddenly become a headwind as now traders fear what it will do to other industries.

Nothing illustrates this point more than a former Karaoke machine maker creating a new AI powered logistics platform allowing companies to “scale volumes by 300% to 400%”.

The reaction – Big logistics companies like CH Robinson fell 15% and Landstar Systems fell 16%.

This is all about the idea that AI levels the playing field and a mom and dad operator can use AI to develop clever delivery patterns that took these huge logistics companies with established networks and warehouses years to develop.

A similar thing has hit software companies like Salesforce

The fear factor out there is running at 12 out of 10.

Maybe it should be because a friend told me a story this week about AI

My friend, has another friend, that runs a business where he outsources Project Managers. As in people. Kind of like a recruitment agent or temp agency. In the past he would have a team of people in the office who would call these project managers and ask what they had done that week so they could report to the client on what had been achieved.

This guy built an AI bot that now calls the Project Managers and creates a report that it sends to the customer. He has done away with his team who used to do this job.

This isn’t a big company with lots of resources creating a sophisticated system. It is a small business using (almost) free existing AI tools.

And that is what has spooked the market. Are we going to see change happen fast because of AI? Is the change here already?

The selling we have seen this year looks very similar to what happens at the end of Bull Markets. Concerns over AI implications and over spending on AI is causing traders to rotate out of Tech and into late cycle groups like Energy, Materials and Industrials.

Here is the Energy sector so you can see what I mean in comparison to the Salesforce (proxy for software sector) above.

But I’m not buying it. I am not buying this is the end of the tech bull market or even that we are in a late stage of the cycle.

These moments of concern happen in all Bull Markets. It is never a one way smooth trend higher. There are always bumps along the way. And this bump is more about coincidence than signaling an end.

The selling of Tech stocks on AI concerns is typical knee-jerk, act first think later traders. The buying of gold and oil is more to do with geopolitical concerns than the end of the line for AI. Just because the two happen to be occuring at the same time does not mean they are related.

Back to AI being a challenge for large companies. It simply isn’t.

Take a company like Salesforce. Its customers are the huge international titans with tens of thousands of users. AI is not going to replace Salesforce.

Imagine you are the CEO of one of those massive international customers with 10,000 staff using Salesforce. Are you going to take the risk of developing your own in house product to remove Salesforce? Yes it might save some money. But what if it goes wrong and causes endless headaches? Is it worth it? No one is going to fire you for using an established product like Salesforce, the same as all your competitors do. But they might fire you for stuffing up and trying to replace Salesforce with AI.

So no, AI is no threat to Salesforce. In fact, it is probably a useful tool, because Salesforce can use AI too. It can build it into Salesforce and use AI to reduce the internal costs of running Salesforce.

The big CEOs know this too. They know Salesforce will do what it can with AI to build AI into Salesforce. And probably do it better than anyone else can anyway. So why would you navigate away from Salesforce? It just makes no sense.

We always want to buy these high flying tech companies at cheap prices. The problem is they are never cheap. Well now there are. Here is your chance.

On the other hand, what AI can do for small companies is a lot. Take my friend’s example above. But we don’t invest in small mom and dad operators, so there is no threat for us. Unless we work for a mom and dad operator I suppose.

To finish today, we have something very special for you. The following is written by Alex Bouris. Alex has been with us for about 18 months and many of you will have spoken with him. I think he has done a good job here, so you can expect to hear more of his ideas in future.

ServiceNow (NOW) – Software Sector

ServiceNow (NOW) provides workflow automation and solutions across IT departments, CRM and security. Their market-leading, cloud-based workflow platform is embedded across several large enterprises, servicing roughly 85% of the Fortune 500 and about 60% of Global 2000.

Its recent earnings announcement, despite strong levels of revenue growth and a positive outlook for 2026, was not enough to halt the recent downtrend. Even though subscription revenue ($3,466 million) reported as growing 21% and total revenue ($3,568 million) by 20.5% year-over-year.

Recent news in the Software sector has investors becoming increasingly worried with the potential impact of AI on their business models. The thinking is that AI companies like Open AI will create their own software adding competition to existing software firms or will allow businesses to easily develop their own custom software.

This is what the bears would say. If you are a bull trader like me, you would be thinking that these AI advancements could allow these software businesses to adopt AI to better serve their customers.

This is the main concern, but for NOW, strong company fundamentals have poised the stock for potential good long-term returns.

The piece everyone is missing is that these enterprise software companies are already too integrated and essential to their large customers that they are almost impossible to replace. No board of directors is going to approve a change from an existing, proven and secure integrated system that someone else maintains, to change to an in-house unproven, AI written custom model. The risks are too great and implementation too hard.

The current selling makes these software companies attractive buys at these levels.

Down at over 50% from highs, the quants at JP Morgan think that’s a buying opportunity. And I think it would be wise to take a leaf out of the experts’ book. After all, their analysts are the ones crunching all the numbers.

JPMorgan chief U.S. strategist has reason to believe that even though there is a current bearish outlook on AI disruption of software, with solid fundamentals we are increasingly skewed toward a rebound in the software sector.

Here are some other software stocks to also consider as AI-resistant and a good value buy:

• Microsoft Corp (MSFT) – down 27% from highs
• Crowdstrike Holdings (CRWD) – down 27%
• Palo Alto Networks Inc (PANW) – down 27%
• Palantir Technologies (PLTR) – down 37%

*valuations as of 12th February close of market 

Warning

Stock values can go down as well as up. It is possible to lose 100% of your investment in a stock. Any advice given by Capital 19 is general advice only and does not take your personal circumstances into account and might not be suitable for you.