Arguably the most bearish forecast on markets this year has been that artificial intelligence will render software stocks fossils. The “vibe coding” enabled by tools like Anthropic’s Claude Code and OpenAI’s Codex, this view holds, will serve as a metaphorical asteroid to the digital dinosaurs about to be wiped out in a SaaSpocalypse.

Guggenheim analyst John DiFucci argued Wednesday that, like a chatbot’s misfired answer, this pessimistic view is “a hallucination.” Software firms, he said, are “one of the best opportunities for patient investors” and, at least for a day, investors came around to the idea that the prevailing sentiment might be overblown.

Apocalypse Not Now

Fear that AI will make traditional software offerings obsolete has been a leading motivator for investors in 2026: The iShares Expanded Tech-Software Sector ETF has tumbled 12.4%. At the same time, the Nasdaq Composite, an indicator of the broader technology sector’s health, has climbed 12.2%. A rise in redemption requests in the private credit industry, which has led some overwhelmed funds to cap withdrawals, has been partly driven by investors’ concerns that they’re too exposed to software firms.

DiFucci said the deep selloff has reached the point where it has created a buying opportunity. “Valuations imply many software companies will decline into perpetuity because of AI,” he wrote in an investor note. “We don’t believe that to be true.” He upgraded software firms Check Point Software, Salesforce and ServiceNow, and their shares rose 2.9%, 4.2% and 6.6%, respectively. Check Point is trading at 12.6 times its forward earnings, and Salesforce at 11.5, significantly lower than a year ago and well below the Nasdaq Composite’s average of 23.2. ServiceNow’s 23.7 forward price-to-earnings ratio is a fraction of the 62.1 a year ago.

• While DiFucci acknowledges AI represents a “technology paradigm shift,” he made the simple argument that there “is significant staying power in enterprise software. If a company is using it to help run its business, it will continue to use it.’”
• For this reason, he said Guggenheim believes software firms will “at least persist (if not continue to grow at reasonable rates in many instances); they’re trading as if they will not, making for one of the best opportunities for patient investors in our careers.”

Trading Up: The software sector benefited from turbocharged spending by companies that adopted work-from-home policies during the pandemic, leading to a corrective slump in recent years. DiFucci said if revenue growth stabilizes, companies “currently trading as if they’ll decline into perpetuity” will “trade as if they’ll at least be stagnant, if not grow modestly into perpetuity.” Guggenheim’s $188 target price for Check Point and $228 target price for Salesforce both imply a roughly 40% upside from Wednesday’s close. Its $128 target for ServiceNow implies a 21% upside.

If Kevin Warsh didn’t just get a new gig, we might suggest he become a professional boxer since he can sure bob and weave.

At the ECB Forum on Central Banking on Wednesday, the Fed chair managed to dodge questions about what we can expect from interest rate moves at the Federal Open Market Committee’s July meeting. It seems he’s trying to keep the conversation focused on inflation — that it’s still too high but is posing less of a risk than it did even a few weeks ago. Energy prices in particular, he noted, have come down “quite substantially.”

Warsh Watch

Since taking over from Jerome Powell in May, Warsh has had Wall Street’s ears glued to every word he’s said about the economy and what it could mean for borrowing costs, while the market’s eyes are glued to the data. This week, the statistics included employment numbers from ADP, which showed that private-sector hiring in June was lower than economists expected. Those economists will be closely watching the Bureau of Labor Statistics’ jobs report coming out this morning as well, especially because the employment picture is a “wild card,” according to Dominic Pappalardo, chief multi-asset strategist for Morningstar Wealth.

The many market watchers keeping up with these figures and what they mean for interest rate projections are probably getting some whiplash:

• Coming into 2026, roughly two rate cuts were priced in by the futures market. Now, CME’s FedWatch tool indicates we’ll probably see a hike by the end of the year.
• “The main driver of that has been the sustained increases we’re seeing in inflation,” with a lot of that inflation increase driven by the surge in energy prices due to the conflict in the Middle East, Pappalardo says. Looking ahead, weakness in the labor market could delay the Fed rate hike markets are expecting, he adds.

Fed Independence: Warsh may be a man of few words, but one thing he seems to want to make clear is that the decision to raise or cut interest rates will be made by the central bank and the central bank alone. “We’ve been an independent central bank for a very long time,” Warsh said at the ECB conference when asked whether he would take President Donald Trump’s calls for cuts into account. “We’re going to be an independent central bank at this moment, and you’re going to see no changes on that.”

One part of people’s budgets is untouchable no matter how thin their wallets get, and that’s Fido’s portion. The only segment of General Mills’ sales in North America that rose in the fourth quarter was its pet business, which includes brands like Blue Buffalo and Tiki Cat. The rest of its earnings, reported yesterday, weren’t as rosy.

The company, which owns brands including Cheerios and Betty Crocker, posted a $2 billion loss last quarter, mainly because of non-cash items. Revenue rose 1% as shoppers skimped, opting for smaller package sizes and sale items.

General Mills said yesterday it’ll try to scrape together $3 billion in cost savings over the next four years, all while innovating in its products. Investors seemed to like the sound of the cereal company’s lean and protein-packed plan, pushing its stock up about 9% yesterday.

Some Aisles Are Sacred

North American sales of pet products rose 4% at General Mills, with its CEO saying, “Cat growth is on fire.” Pet spending has continued to notch gains annually, despite tapering from its pandemic peak. But Crookshanks continuing to get treats isn’t enough for General Mills:

• It cut prices on two-thirds of its products last year to appeal to budget-conscious shoppers — rival PepsiCo announced similar plans. But with shoppers driving a hard bargain, General Mills is now trying to make its products worthy of buying even when they’re not tagged “buy one, get one half off.”
• The cereal-seller’s biggest upsell seems to be protein, which has swept through the food biz, infiltrating everything from Starbucks lattes to Pop-Tarts. After its protein-packed Cheerios flew off shelves, General Mills said its product innovation plans will focus on protein and fiber this year.

Still Soggy: The company’s focus on improving its merch doesn’t mean discounts didn’t work. During last year’s fiscal fourth quarter, when consumers felt like they needed a pot of gold to afford a box of Lucky Charms, the retail segment of General Mills (human food, not pet food) saw North American sales slide 10%. At the same time this year, that slide leveled out somewhat to 4%. Getting the balance right between prices and sales will be like pouring the perfect ratio of cereal to milk.