Tech stocks are trading lower as investors assess whether AI could upend current software leadership. Analysts say the market reaction is overblown.

It might be hard for investors to feel upbeat while tech stocks are tumbling. But that's exactly how some experts are reacting to the rout.

The tech-heavy Nasdaq index fell 1.5% yesterday as fears of AI disruption picked up pace, although futures indicate a modest rebound. Software-as-a-Service (SaaS) stocks were particularly hard hit again, with the S&P 500 software and services index now down nearly 13% over ‌the past six sessions.

AI’s PR problem stems from a growing fear that the technology is causing mass layoffs. A staggering 1.2 million jobs were slashed last year, up 58% from 2024. Even though most job cuts don’t appear to be tied to AI automation, companies are using the technology as an excuse to make routine headcount reductions, according to management experts.

The fourth-quarter earnings season will give the megacaps an opportunity to lay out their 2026 spending visions and, in some cases, defend those plans.

Microsoft, Apple, and Meta posted strong earnings fueled by cloud and iPhone demand, while DeepSeek pivoted to Nvidia's AI chips and OpenAI entered talks to raise nearly $40 billion from major tech partners.

A tech industry group is suing Utah, claiming its law requiring app stores to verify users' ages before downloading apps constitutes