Tech Troubles & a Spot of Optimism

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Now, one does observe a certain amount of fluttering in the dovecotes of the financial world, particularly where the tech sector is concerned. A bit of a wobble, you might say. It’s all very well for the pundits to predict doom and gloom, but a seasoned observer – and yours truly, naturally, qualifies – tends to view these things with a detached amusement. After all, markets, like Aunt Agatha’s temper, are prone to sudden and inexplicable swings.

Mr. David Solomon, the rather important fellow at Goldman Sachs, has been airing his views, and a sensible chap he seems. Speaking at a gathering hosted by UBS – a name that always sounds suspiciously like a sneeze, doesn’t it? – he expressed a generally cheerful disposition regarding the American economy. Things, he suggests, are, on the whole, ticking along nicely. A most agreeable state of affairs.

However, the current fuss over the tech stocks has given him a bit of a frown. The Nasdaq-100, that notoriously excitable index, has been performing rather less brilliantly than one might wish, lagging behind the steadier S&P 500 (^GSPC +0.05%). A lot of these software-as-a-service concerns – the SaaS fellows, as they’re known – are feeling the pinch, largely due to a perfectly understandable apprehension that these newfangled artificial intelligence tools might rather upset the apple cart. A bit of a fright, what?

Let us delve, then, into Mr. Solomon’s pronouncements on this AI-induced kerfuffle, and consider how the discerning investor might navigate these slightly choppy waters.

Goldman Sachs’s Chief: A Dash of Perspective on AI

Mr. Solomon, in his wisdom, anticipates a few bumps in the road – a “speed bump or recalibration or slowdown,” he calls it – before the year is out. Perfectly normal, of course. And he concedes that this AI business might contribute to a temporary downturn. But – and this is the crucial bit – he believes the current narrative is a trifle overblown. “Too broad,” he says, with a commendable lack of panic. “There’ll be winners and losers, and plenty of companies pivot and do just fine.” A remarkably sensible observation, if you ask me.

Investing in the Software Sphere During the AI Boom

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Now, if you’re of the opinion that these AI systems are poised to render the entire software industry obsolete, then perhaps a hasty retreat is in order. But history, my dear fellow, teaches us that revolutions rarely obliterate everything in their path. More often, companies adapt, innovate, and find new ways to prosper. It’s a bit like Aunt Agatha learning to operate the wireless – a bit of a struggle at first, but eventually she got the hang of it.

Mr. Solomon’s remarks serve as a timely reminder that the AI boom need not spell disaster for the software sector. Many companies will undoubtedly find ways to leverage these new technologies, enhance their products, and discover fresh avenues for profit. Some, I daresay, are already doing so.

If you’re inclined to “buy the dip,” as the moderns say, a rather convenient vehicle is the iShares Expanded Tech-Software Sector ETF (IGV +2.24%). This fund, which tracks the S&P North American Expanded Technology Software index, has delivered a respectable average annualized return of 8.4% over the past five years. It provides exposure to a diversified basket of 114 software companies, including such stalwarts as Microsoft, Palantir, and Salesforce. Its expense ratio is a modest 0.39%. At present, it’s down over 20% year to date, which, while a bit alarming, might present a rather attractive opportunity.

Past performance, naturally, is no guarantee of future results, and Mr. Solomon’s comments should not be interpreted as an endorsement of any particular stock or sector. But his assertion that the recent sell-off has been “too broad” can be seen as a vote of confidence in the sector’s prospects for recovery. Despite the current turbulence, there are, I submit, good reasons to believe that there are buying opportunities to be had in the software space. A bit of shrewd investing, and one might just turn a tidy profit.

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2026-02-16 13:24