The unrelenting selloff in software shares has left tech investors antsy enough that they’re starting to pony up for protection against yet another steep slide.
There’s good reason for the concern. Software stocks plunged again Wednesday, with the Goldman Sachs software basket clocking its seventh straight drop to bring its loss for the year to 19%. The rout bled into broader measures of the tech sector, dragging the Nasdaq 100 down 1.4% so far in 2026.
That uncertainty sent insurance against a 10% drop in the Invesco QQQ Trust Series 1 ETF soaring to the highest level since March 2020 relative to bets on a rally, data compiled by Bloomberg show. Meanwhile, implied volatility in the iShares Expanded Tech-Software Sector ETF is at its highest level since April’s tariff turmoil, pushing up options premiums.
And while there are signs the selling has become overdone, the ructions in the industry caused by artificial intelligence applications are severe enough that pricing a bottom has become a fraught exercise.
“The question is how low do you go?” said Michael Bailey, director of research at wealth management firm FBB Capital Partners. “Investors hate software, that’s pretty clear.”
