Amid growing market turbulence, stocks of software companies have demonstrated notable resilience, standing out against the backdrop of a general market decline. Last week, shares of these companies increased by 0.5%, while the Nasdaq dropped by 3.5%, highlighting their relative stability during an unstable period.

Bank of America analysts identify two key software sectors with differing dynamics: communication software and design software. Stocks of companies involved in communication technologies, such as RingCentral (NYSE), have shown significant growth of 6.9%, contributing to an overall increase of 4% in this segment. This can be linked to a market rotation towards high-quality small and mid-cap stocks that are receiving increased investor interest.

In contrast, stocks of companies engaged in design and graphics, such as Adobe (NASDAQ), have declined by 3.3%. This decrease, according to analysts, may be attributed to changes in artificial intelligence trade and a potential slowdown in the adoption of new technologies in this sector.

Recent volatility in the software market is attributed to several key factors. The potential for a decrease in interest rates, driven by weakening consumer price index data, has led to short position coverages and renewed interest in previously overlooked stocks. Additionally, there is a shift from macroeconomic issues to company-specific factors, affecting stock dynamics across various software sectors.

Bank of America analysts also note that the current EV/NTM FCF/Growth ratio for large-cap software stocks stands at 1.5x, below the five-year median of 1.7x and the 1.9x level at the beginning of 2024. This indicates potential for long-term growth despite short-term fluctuations.

According to Bank of America forecasts, market volatility in the software sector is expected to continue in the second quarter of 2024. However, a recovery in cloud and enterprise spending may contribute to improved performance in the latter half of the year. Interest in cloud technologies and enterprise solutions remains high, and analysts believe this will be a key factor in maintaining positive dynamics for companies such as ServiceNow (NYSE) and Adobe.