Episode summary
Software Stocks Have Plunged: Steals or Traps?
Summary
Software stocks have been punished in 2026, and the host argues that the selloff in Twilio, Salesforce, and Adobe may be creating opportunities rather than traps. Her basic test is whether falling share prices are being matched by deteriorating earnings; if the earnings outlook is still rising, she is more willing to call the decline a value setup. She also notes that AI fears are driving a lot of the pressure, even though she does not see clear evidence yet that these businesses are being bypassed.
Twilio looks the most interesting on her screen: the stock is down sharply this year, but expected earnings growth remains positive, the forward P/E is 21.9, and the PEG is 1.1. Salesforce also screens as cheap with double-digit growth still projected, and the analyst revisions data look constructive. Adobe appears the most beaten down of the group, near five-year lows and under $300, but its earnings estimates have been relatively steady, which she reads as a bullish sign. She keeps all three on her watch list while waiting for upcoming earnings reports and conference calls.
Key takeaways
- The host says Twilio, Salesforce, and Adobe are down hard in 2026, but the earnings outlook has not broken down with the stocks.
- Twilio is her favored setup because expected earnings growth remains positive and the forward PEG of 1.1 suggests a cheap valuation.
- Salesforce looks less broken than the chart suggests, with 18 upward estimate revisions for fiscal 2026 and 14 for fiscal 2027.
- Adobe looks the most hated, but the host says its earnings estimates have barely moved and that supports a value case.
- The host says AI fears may be pressuring software multiples, but she sees no real evidence yet that these companies have been displaced.
Notable quotes
“Are they deals or is this a trap of some sort”
“So, just that the stock is falling isn't enough. It uh is sucking you in as those earnings decline”
“there's no real evidence of this happening yet”
“I'm finding Twilio might be a deal here”
“This could be a buying opportunity on Salesforce”
How the episode opens
Stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life.
I'm your host, Tracy Reinick, and this week I'm going solo to talk about the software stocks. I've been getting a lot of messages from many of you asking what should you be doing with Adobe, with Twilio, with Salesforce. They've really been lagging, especially this year in 2026.
Are they deals or is this a trap of some sort? So, I thought I would uh tune in to those three and we'll check them out in bigger detail and see what is going on behind the scenes. Maybe there's nothing we can do until we get the actual earnings in on some of these, but I did see the Salesforce CEO at Davos this week and he mentioned that there's a lot of buzz around companies that have the LLMs on the AI side and not as much on everybody else who's making products with AI and integrating it.
So, he seemed pretty annoyed that his stock was struggling. And uh we're going to check out check it out and see again if any of these are some kind of deal or if they look like they're traps. And remember, traps can mean uh the earnings are on the decline.
So, just that the stock is falling isn't enough. It uh is sucking you in as those earnings decline. But what if the earnings aren't declining?
then you might have some kind of deal there. So, let's dive in right away on some of the charts. But before I do, I did want to mention these flowers behind me if you're watching the video.
Uh because they're blooming again, my Amorillis uh blooms here that I get every holiday.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai worries
- software stocks
- oversold
- five-year lows
- stock plunge
Watch the episode
Watch “Software Stocks Have Plunged: Steals or Traps?” on YouTube
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