Tech Underperforms Amid Software Slump: Danske Bank Reveals Critical Market Shifts

Danske Bank warns that technology stocks are underperforming, driven by a deepening software slump that is dragging the US SP 500’s tech exposure lower. Slowing enterprise software spending, higher interest rates that compress long-duration valuations, rising churn and falling contract values have reduced revenue and growth visibility. Market data (Q1 2025) shows the Nasdaq trailing the S&P 500 and tech-focused ETFs experiencing three months of net outflows. Danske advises portfolio reweighting — trimming pure-play software, boosting defensive and value sectors (healthcare, financials, energy), and holding more cash/bonds — while maintaining a constructive long-term view. Analysts expect earnings pressure from major software names (Microsoft, Oracle, Salesforce) in upcoming reports; recovery in software spending is forecast six to nine months after rate stabilization, potentially in early 2026. The bank’s outlook signals short-term caution for equities driven by tech weakness but leaves scope for long-term opportunity for resilient, cash-generative firms.