Who Gets Lifted, Who Gets Left Behind
Tech stocks helped drive a broad market rebound in April 2026, with the Magnificent Seven leading the recovery and software and cybersecurity shares joining the rally after a difficult start to the year. The rebound came after a sharp selloff earlier in 2026 and followed a market bottom on March 30, when the Magnificent Seven were down about 20% from that point by mid-April. The same market that chewed up smaller names and left whole sectors wobbling found its footing again once the biggest players started climbing back.
The rally lifted the broader market, with the Dow Jones Industrial Average and the S&P 500 regaining all losses from the U.S.-Iran war, while big tech staged what Bloomberg described as a "boomerang" worth roughly $4 trillion. CNBC said cybersecurity and enterprise software stocks had been market dogs since the start of 2026 because of fears that AI would wipe out a wide range of companies in the enterprise space, but they snapped a brutal losing streak during the latest rally. The language is almost too neat: a handful of giant firms swing, and the rest of the market gets dragged along behind them.
The Big Names Set the Pace
Microsoft, which had recently been down close to 20% for the year, surged 13% last week. The Global X Cybersecurity ETF, ticker BUG, was down about 12% since the beginning of the year but rose 12% last week. The First Trust NASDAQ Cybersecurity ETF, ticker CIBR, was down 6% for the year but gained 9% in the past week. Piper Sandler analyst Rob Owens reiterated an "overweight" rating on Palo Alto Networks, helping the stock rise 7%; Palo Alto Networks was then down roughly 6% on the year. Its peers, including CrowdStrike, also moved higher.
Christian Magoon, CEO of Amplify ETFs, said cybersecurity had been "a victim of some of the AI-related headlines." He said a rotation within tech toward AI infrastructure, semiconductors and other large-cap names had left software and cybersecurity behind even as those businesses continued to grow on a fundamental basis. Magoon said expectations may also have become too high in cybersecurity and that crowding among investors meant solid results were not enough to push stocks higher. That is the familiar hierarchy of the market apparatus: the biggest names get the oxygen, while everyone else waits for the next rotation.
What the Analysts Call It
Brent Thill, Jefferies tech analyst, said on CNBC's "Squawk Box" on Wednesday that "I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated." Michael Burry wrote in a Substack post on Wednesday that he was becoming bullish about software stocks after the recent selloff. He wrote, "Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt."
Magoon said AI adds both opportunity and uncertainty to cybersecurity, increasing demand but also introducing new competition. He said, "I think the dip is good to buy in an AI-driven world," adding that the risks to companies may lead to more M&A in cyber names that benefit the stocks. Thill said, "I think investors are still going to remain underweight software." Magoon said, "The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on."
Magoon also cautioned that there could be a potentially bigger drawdown in the market later in 2026 because midterm election years have historically been marked by large drawdowns. He said, "If you think it is bad right now, it could get a lot worse," but added that the market has posted very strong 12-month returns after midterm election drawdowns end. Even the warning comes wrapped in the logic of the same system: pain now, recovery later, and everybody is supposed to keep playing the game.