By now, it may seem like the software industry's recent stumble is old news... The carnage in the space has been all over the financial media. And here in the Chaikin PowerFeed, my colleague Joe Austin has warned about these stocks a couple times...
Finding Hidden Standouts in This Beaten-Down Industry
By Vic Lederman, publisher, Chaikin Analytics
By now, it may seem like the software industry's recent stumble is old news...
The carnage in the space has been all over the financial media. And here in the Chaikin PowerFeed, my colleague Joe Austin has warned about these stocks a couple times...
At the time, the State Street SPDR S&P Software & Services Fund (XSW) had a "very bearish" rating. And only 10 stocks in the fund had a "bullish" or better grade. That compared with 56 "bearish" or worse holdings... and 71 in "neutral" territory.
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The Power Gauge Says This Software Stock Is Unique
Right now, Zoom Communications (ZM) is one standout in the software industry...
The company needs little introduction. It's a household name with videoconferencing.
You see, as XSW has shed about 15% of its value over the past month, Zoom's stock has jumped by roughly 9%.
ZM shares were trading around $81 on January 21. Barely a week later, they spiked to more than $96.
This growth was far from random. Take a look at this one-month chart of Zoom with some data from the Power Gauge...
You see, the "smart money" on Wall Street had its eyes locked on Zoom. As Zoom's stock price crossed above its long-term trend line, these institutional investors dove in.
Again, this isn't a coincidence. This influx of smart money drove the share price even higher.
Naturally, this growth caused the Power Gauge to flip Zoom's rating into "bullish" territory. Today, the stock earns a "very bullish" rating.
Folks, there's something special about Zoom's business that has helped protect it from the longer, broad downtrend in the software space.
You see, many investors fear AI could render certain software irrelevant. But that sentiment isn't hitting Zoom...
Using AI to Augment Instead of Replace
Again, Zoom's software is for videoconferencing. The platform allows folks to collaborate for work, school, or recreational purposes.
Of course, the company includes an AI model in its software. But it augments the main function rather than replaces it...
Zoom's AI takes notes and captures the context of conversations that users have in real time. It can then turn those notes into briefs, documents, or even assist with follow-up actions to streamline workflow.
As AI develops, humans will still need ways to communicate online – especially in recreational ways. So it's unlikely that AI agents can outright replace this basic human need.
But as I noted, AI certainly can provide a productivity boost for Zoom's users. The company's business can benefit from advancements in AI.
Of course, Zoom isn't the only example of this concept. Another, although smaller, videoconferencing stock – RingCentral (RNG) – is among the five "bullish" stocks in XSW today.
As a whole, the Power Gauge says that software is still a risky industry right now...
But this shows just how much investors can benefit from finding stocks that stand out from the rest in their industry.
And here at Chaikin Analytics, the Power Gauge is at our side to help do just that.
Good investing,
Vic Lederman Editor's note: Amid all the changing sentiment with AI and tech, being selective with stocks is especially important in the current environment. That's why Chaikin Analytics founder Marc Chaikin just went on camera yesterday for a special event...
In it, he shared a new twist on what he sees coming in 2026. And he explained a chance to double your money on multiple occasions... if you understand what's coming next to AI and other breakthrough sectors.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+4.93%
Real Estate
+2.57%
Health Care
+1.31%
Consumer Staples
+1.2%
Industrials
+0.67%
Energy
+0.32%
Materials
-0.4%
Consumer Discretionary
-1.94%
Information Technology
-2.15%
Financial
-2.52%
Communication
-2.7%
* * * *
Industry Focus
Capital Markets Services
11
36
16
Over the past 6 months, the Capital Markets subsector (KCE) has underperformed the S&P 500 by -11.55%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #17 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
ARES
Ares Management Corp
CG
The Carlyle Group In
COIN
Coinbase Global, Inc
* * * *
Top Movers
Gainers
NCLH
+12.15%
FISV
+6.89%
LUV
+6.16%
CEG
+5.05%
PSKY
+4.94%
Losers
GPC
-14.56%
ALLE
-9.38%
LDOS
-8.38%
VMC
-7.76%
FDS
-7.64%
* * * *
Earnings Report
Earnings Surprises
CNH CNH Industrial N.V.
Q4
$0.19
Beat by $0.08
KVUE Kenvue Inc.
Q4
$0.27
Beat by $0.05
VMC Vulcan Materials Company
Q4
$1.70
Missed by $-0.41
EQT EQT Corporation
Q4
$0.90
Beat by $0.14
GPC Genuine Parts Company
Q4
$1.55
Missed by $-0.27
* * * *
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