Missed Nvidia in 2009? This Rare Signal Is Flashing Again.\u00a0In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia.\u00a0For the first time in years, that same “Total Conviction” signal is flashing for a company 1\/100th the size of Nvidia.\u00a0Continue \u00bb<\/a> <\/p>\n If there is an AI bubble, it could lead to further pressure on semiconductor and hyperscaler stocks. One sector that could benefit currently looks extremely cheap, and it’s worth buying now regardless of whether there’s an AI bubble. <\/p>\n Earlier this year, software stocks tumbled as investors feared artificial intelligence services like Anthropic<\/a>‘s Claude Code could cut into their growth. Many analysts re-rated the value of current earnings because they felt future earnings growth wasn’t as predictable as it had been for many software-as-a-service (SaaS) companies. <\/p>\n The market indiscriminately sold off software stocks, with the iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) dropping nearly 30% from the start of the year through early April. While the sector has bounced back over the last few months, there are still plenty of values in software. <\/p>\n If there is an AI bubble, those companies hit hardest by the software sell-off earlier this year could be some of the biggest beneficiaries. First of all, it might suggest that AI isn’t as capable of fully replacing existing enterprise software solutions as feared. While many SaaS stocks have considerable moats that would protect their businesses against AI disruption, the fear of AI disruption has remained a significant overhang on stock prices. <\/p>\n Second, software companies integrating generative AI tools into their core offerings may be able to access the compute power needed to run those features at significantly lower cost. If hyperscalers overbuild and there’s not enough demand to meet the supply, they may be willing to sell access to their services at a lower price. That would transfer gross margin from hyperscalers to their customers, like software companies. <\/p>\n Story Continues <\/p>\n Not every software stock will be a winner. But large software companies with considerable free cash flow and low valuations could be well-positioned to benefit from capital market trends, potential operational flexibility, and financial wherewithal. <\/p>\n Some potential winners if investors move away from AI stocks <\/p>\n If investors move capital away from the biggest AI winners, like semiconductor stocks and hyperscalers, they may want to stay in the tech sector. As such, software stocks trading at attractive valuations could be natural landing spots for many. <\/p>\n Some of the most beaten-down stocks have already seen significant share price recoveries, including Adobe (NASDAQ: ADBE) and Salesforce (NYSE: CRM). Even after a recent increase in price, the two stocks trade for forward price-to-earnings (P\/E) ratios of 10.3 and 13, respectively. Meanwhile, both are producing solid free cash flow: $10.3 billion for Adobe over the last 12 months, $14.7 billion for Salesforce. <\/p>\n Both stocks are down due to fears of slower growth. Analysts expect revenue growth of just 9% per year for both companies. Management continues to deliver growth above expectations, but investors remain worried about the future. Salesforce expects revenue to accelerate in the back half of the year after posting growth of 12% in the first quarter. Adobe grew revenue 13% last quarter while showing strong progress on its top-of-funnel freemium offering, which should support long-term revenue growth. <\/p>\n Additionally, both are using AI to improve their products, increasing their utility and expanding their moats compared to smaller competitors. Adobe offers its own Firefly model, which is trained on its stock photos and videos. Salesforce introduced Agentforce, which uses its Data Cloud to automate some operations within its software. <\/p>\n These are just two examples of opportunities in the software sector. Investors could buy the whole lot with the iShares software sector ETF, but those who buy the highest-quality software stocks could do even better. <\/p>\n Should you buy stock in iShares Trust – iShares Expanded Tech-Software Sector ETF right now? <\/p>\n Before you buy stock in\u00a0iShares Trust – iShares Expanded Tech-Software Sector ETF, consider this: <\/p>\n The Motley Fool\u00a0Stock Advisor\u00a0analyst team just identified what they believe are the\u00a010 best stocks<\/a>\u00a0for investors to buy now\u2026 and\u00a0iShares Trust – iShares Expanded Tech-Software Sector ETF\u00a0wasn’t one of them.\u00a0The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. <\/p>\n Consider when\u00a0Netflix\u00a0made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $386,727!*\u00a0Or\u00a0when\u00a0Nvidia\u00a0made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $1,232,139!* <\/p>\n That performance is why people listen. With a track record of\u00a0beating the S&P 500 by 4x,\u00a0Stock Advisor\u00a0offers a distinct advantage. Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built for the long haul. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 2, 2026. <\/p>\n Adam Levy<\/a> has positions in Adobe and Salesforce. The Motley Fool has positions in and recommends Adobe and Salesforce. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. The stocks that could benefit from too much spending on AI <\/p>\n