A Friday bounce Some investors may have been feeling better heading into the weekend, but a violent selloff in technology names focused on the software industry last week had Wall Street strategists scrambling to calm the nerves of clients across the investment world.

Software names were crushed on Tuesday, Wednesday and Thursday last week as investors charged even more aggressive breaks for these companies amid advances in AI, with the adoption of Claude Code from Anthropic the latest source of angst.

And despite Friday’s rally, the tech-heavy Nasdaq posted a weekly decline of more than 2%, with software giants Salesforce (CRM) and ServiceNow (NOW) shares fell more than 9%, among a number of other names in the space that also fell.

Still, the magnitude of the selloff prompted several strategists to plead for patience and suggest the moves may have outweighed the potential risks facing these industries.

“You’re getting to a point where this probably seems overkill,” said Brian Levitt, chief global market strategist at Invesco. he told Yahoo Finance last week “We’ve seen some names taken out pretty significantly.”

“Clearly there’s concern about what some AI programs will mean for different software companies, but we’ve seen some names removed quite significantly,” he added.

Strategists believe the disruption will not be severe for all companies.

“The larger software companies that are positioned to adapt will do well,” said Mike O’Rourke, chief market strategist at JonesTrading. “The problem is that there are new risks.”

O’Rourke said the productivity comments during Alphabet’s earnings call only reinforced “the alarm” the market has sounded about AI agents.

Earnings from Big Tech giants over the past week also revealed the huge amount of capital pouring into AI, as capital spending by Amazon (AMZN), Alphabet (GOOG, GOOGLE), Meta (TARGET), and Microsoft (MSFT) are set to exceed $650 billion.

“Investors are now more demanding,” Dave Mazza, CEO of Roundhill Investors, he told Yahoo Finance on Friday.

“Do people really pull back before they start saying, ‘How much do I want to value a company even if it grows,’ knowing that they’re moving from a capital-light industry to maybe a more capital-intensive industry?” he added.

Mazza mentioned that there are still areas of the market that remain undervalued, such as Consumer Staples (XLP) and Energy (XLE).

In particular, cyclical and defensive sectors have also outperformed technology (XLK), which is negative for the year.