The software shellacking continues.

Earnings and guidance are doing more to drive nails in the coffin of software, rather than make a case for being long.

But this story is far deeper – we are talking existential threat from artificial intelligence.  Last year at this time, there were nonstop stories suggesting AI had killed Alphabet’s (GOOG/L) search business, and the stock sagged. Turns out Google had the last laugh, emerging from 2025 as the de facto AI winner.  Most of these names do not possess Google’s wherewithal to come back, and many will fade away.

Biggest Decliners

We have two names in the carnage. Our work tells us ServiceNow (NOW), and Datadog (DDOG) will be okay, and even prosper, but we would not add any extra cash right now.

Biggest Advancers

People are still spending time on recreation and dining out. Southwest Airlines (LUV) underscores that execution matters in the airline industry (United Airlines Holdings (UAL) is getting hammered).

Overall, there is an overdue wave of profit-taking, which we welcome.