GCQ Funds Management, a Sydney-based hedge fund managing over A$2 billion in assets, has declared that a 'bottom' is in place for the global software stock sell-off. According to reports from CNBC TV18, the fund purchased A$200 million ($143 million) worth of tech stocks during the recent market downturn. To fund this significant purchase, GCQ sold some of its top-performing holdings, including shares of European luxury goods companies. The fund has specifically targeted shares of Microsoft, Intuit Inc. and SAP SE during the buying opportunity, as reported by Bloomberg.
The software sell-off reached its peak following a blog post from Citrini Research, a little-known entity that sketched a stark disruption scenario about AI advancements. As reported by Bloomberg, CIO Doug Tynan described Monday's market reaction as 'one of the strangest days in markets I've ever seen'. Tynan stated that a hypothetical science fiction scenario from someone he'd never heard of not only dropped the market but caused the White House to comment. He declared this as 'the bottom' of the software sell-off, calling it 'one of the most illogical market selloffs I have ever seen'. US software stocks have since rebounded from Monday's slump, rising for a third session through Thursday as investors renewed bets on companies making strident moves to embrace AI technology.
Despite software companies boosting buyback plans, investors remain skeptical that these measures will halt the selling pressure. According to Reuters, US software firms have stepped up stock buyback plans during the months-long rout, with investors and strategists doubting it will stem the selling. Since January 12, U.S.-listed software companies have authorized $70.5 billion in stock repurchases, nearly four times the value of announcements for the same period a year ago. Salesforce announced a $30 billion increase to its existing share repurchase program, while ServiceNow authorized an additional $5 billion in buybacks on top of the $1.4 billion remaining in its existing plan. However, experts like Andrew Slimmon from Morgan Stanley Investment Management prefer companies that repurchase shares when they have strong fundamentals and price momentum, as reported by Reuters.
Software stocks like Salesforce, Adobe and their peers experienced a sharp sell-off in February following concerns raised by AI firm Anthropic's tools about the viability of software company business models. Despite the recent small rebound, software stocks-linked ETFs on the S&P 500 remain in bear market territory with a 30% fall from the top. However, recent developments show renewed investor confidence, with shares in Block Inc. soaring 25% in after-market trading after the company announced it would cut almost half its workforce — around 4,000 people — as part of a pivot toward AI. The fund's strategy reflects confidence in the sector's recovery potential despite the challenging market conditions.
GCQ itself is experiencing underperformance with one of its largest holdings, Swedish property portal Hemnet Group AB, down over 70% from its 2025 peak. Despite this significant decline, the fund is on course for the highest monthly inflow on record after a A$50 million inflow last month. The fund has also doubled down on property portals, buying the UK's Rightmove PLC and SMG Swiss Marketplace Group AG, and added to its position in Hemnet after earlier trimming its holding as the stock declined. The fund's distribution team and Tynan himself have urged clients to take advantage of cheap software stocks, positioning themselves for potential recovery in the sector.