The software apocalypse of 2026: 3 stocks down 25%+ to consider buying now, according to JP Morgan

With many software stocks down 25%+ from their highs, it may be time to consider buying. That’s the view of the commentators on JP Morganwho recently said that the decline in this market place is extreme and driven by the fear of irrational AI disruption.

Here, I will highlight three software stocks that JP Morgan has highlighted in his research paper as Buys. Is it worth considering today?

Microsoft

Let’s start with the mega-cap Microsoft (NASDAQ: MSFT). It fell to $400 after trading near $550 in late 2025.

I like this choice. In my mind, this company is one of the safest choices in software.

Why? Because it’s a really different business.

Not only is it a major player in business productivity software, but it is also a global leader in cloud computing and video playback.

Additionally, it is a major player in AI itself. Because it has a large share in ChatGPT owner OpenAI.

Of course, there are risks. Another big one is that most of the expected cloud growth is tied to OpenAI (risk of customer frustration).

Since the stock now trades at a forward price-to-earnings (P/E) ratio of 21 (using next year’s earnings forecast), however, I’m bullish. I plan to buy more shares in my portfolio soon and believe it is worth a look.

Service Now

The following is Service Now (NYSE: NOW). Dropped from $200 to $100.

This is another good call, in my opinion. Although this company is not very well known, it is a really important player in the corporate world.

Today, it provides critical operating software for many large companies (85% of the Fortune 500). From an apple to GSKeveryone uses its software.

In simple words, it handles all the work behind the scenes. Consider IT incidents, employee claims, and security cases.

Given the way its solutions are embedded in large international companies, I doubt this company will be replaced by AI. Ultimately, I expect AI agents to work on top of its own software.

Risk values. Looking ahead, the group may need to adjust its pricing model as companies wind down operations and lay off workers.

I expect it to continue to grow though. And with a P/E ratio now in the low 20s, I think it’s worth considering.

Zscaler

Finally, we have it Zscaler (NASDAQ: ZS), a small, but fast-growing cybersecurity company. Its share price fell from $330 to $165 – a drop of about 50%.

Cybersecurity strikes me as an area of ​​software that should be protected from AI interference. Because this is a really specialized field and I don’t think companies will be able to ‘shake up’ their cybersecurity applications.

In my mind, it wouldn’t be worth the risk. Get it wrong and the company could be out of business if hit by a massive attack.

Yes, although this company has been able to generate more growth in recent years (five-year revenue growth of 520%), there are no guarantees that this will continue. This is a dynamic industry and threats may emerge over time.

Any decline could hit the share price. Because the stock has strong growth value.

However, I am still bullish and plan to buy more shares for my portfolio in the coming weeks. In my opinion, it’s worth a closer look.