TMS Insights February 2026 Part 1: The software sell-off, and why we're running into it
US software stocks have fallen 30% top to bottom, and the businesses hit hardest were the market's AI darlings a year ago. In this special edition of TMS Insights, Ben joins from holiday to explain why the selling looks indiscriminate, and why that's exactly the opportunity.
In this episode:
- A series of AI product releases, including in legal software, sparks a rout across the SaaS sector, flipping the market's view of these businesses from AI winners to AI victims in the space of a year.
- Xero holds an investor day almost entirely about AI, delivers a profit upgrade, and every analyst raises their target. The stock falls 15% the next day anyway, purely in sympathy with US rival Intuit.
- The GLP-1 lesson: markets correctly predicted 100 million Americans on weight loss drugs, and got every second-order call wrong. ResMed halved and recovered, McDonald's sits at an all-time high, and behaviour changed far more slowly than share prices assumed.
- A local rate rise and a more hawkish Fed pick in Kevin Warsh shift the backdrop, while a 70 cent dollar makes cheaper US stocks cheaper again for Australian investors.
- And BHP hits an all-time high with copper heading toward half of group earnings, a reminder of why diversification gives a portfolio its shock absorbers.
Companies discussed: Xero (XRO), Intuit (INTU), ResMed (RMD), Fisher & Paykel Healthcare (FPH), Life360 (360), Pro Medicus (PME), BHP (BHP), Rio Tinto (RIO), Mineral Resources (MIN) and Fortescue (FMG).
If you'd like a conversation about how your portfolio is positioned, or a second opinion, our team is always happy to talk.
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