Dare we say it is time to buy software shares? The stocks could rebound, at least in the short term, after a devastating slide.

The iShares Expanded Tech-Software Sector exchange-traded fund is down 31% to about $80 from a record high of just over $117 in late September. The reasons why are well known.

Anthropic and OpenAI could use their cutting-edge artificial intelligence technologies to do jobs now handled by specialized software, displacing some of the hundreds of companies that produce those programs. Meanwhile, Microsoft and Oracle are investing hundreds of billions of dollars annually in aggregate into AI data centers. But Oracle has borrowed a large portion of that, and many wonder whether Microsoft, like other software companies, will face a competitive threat from Anthropic and OpenAI.

Almost every stock in the software fund has gotten hammered. Over the course of the decline, many have argued that it is time to buy the dip, including Barron’s. And every time that chorus grows louder, the stocks take another beating.

But now, the signals to buy are stronger.

The ETF hit a bottom early this month at just over $79, almost perfectly in line with where buyers have stepped in in the past.. The fund saw buying support at $81 after an April 2025 selloff, and in the high $70s to low $80s from late 2023 through 2024. That pattern shows traders and investors have been, and remain, extremely willing to buy at these cheaper prices, potentially sending the stocks higher.

The caveat is that the stocks could easily become cheaper. Savita Subramanian, Bank of America’s head of U.S. equity and quantitative strategy, says her analysis, based on factors including recent changes to earnings estimates by analysts, indicates forward price/earnings multiples for software companies could drop some more.

That is certainly possible, especially if the major AI pioneers start offering business-specific AI products to corporate customers. That would prompt the market to assume estimates of near-term earnings for software will drop, sending the shares lower.

But those offerings of AI-based services are only just beginning to emerge. For the immediate term, the software group could experience a meaningful bounce.

An extremely encouraging sign: Insiders have bought shares. John Stanton, who has been on Microsoft’s board of directors since 2014, bought 5,000 shares of the company late this month for close to $2 million, according to a Securities and Exchange Commission filing. That is the first insider Microsoft purchase in the past ten months, according to Jefferies trading analyst Jeff Favuzza.

Insider buying is a bullish signal because it indicates that someone who knows a company sees something in the fundamentals that could boost the stock soon.

Favuzza’s research shows that since early 2022, while insiders have usually used rallies in Microsoft stock as opportunities to sell, the shares took off on the one occasion when insider buying emerged. The stock leapt 51% to a record high over the six months starting last April.

Even if software as we’ve known it has an uncertain future, the stocks will likely experience a major bounce. It could happen soon.

The market will continually assess the industry’s future and will ultimately find those areas that are immune to the competitive threat. Cybersecurity is an example. The technology is highly complex, so it could be a long time until Anthropic and OpenAI develop the tech capabilities to take much market share from the current players in that business.

“Our judgment: if you want to add a Software name, add a fast-growing expensive one, like Palo Alto Networks, Fortinet, Synopsys,” writes Adam Parker, founder of Trivariate Research. All those are cybersecurity stocks.

Any trader that wants large gains must take some risk. The risk is worth taking in software right now.