iShares Expanded Tech-Software Sector ETF (IGV)
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It has been a TOUGH year the software sector, with companies like Microsoft, Palantir, Oracle, Salesforce, Intuit, and more many more down significantly from their 12 month highs. The reason? AI. Artificial intelligence is usually referenced in a positive tone on the stock market, but a recent speculation has emerged that AI and AI Agents threaten software-as-a-Service (SaaS) companies. While this theory may hold true for some smaller, lesser complicated systems, it hardly impacts big names like the ones we mentioned above.
The biggest difference maker is data. AI and AI agents are only as good as the data they operate on. A name like Intuit, for example, has decades of proprietary financial data across millions of individuals and small businesses flowing through products like TurboTax, QuickBooks, and Credit Karma, giving it an enormous training advantage that new AI startups simply can’t replicate overnight. Intuit is just one example, you can imagine this applies across many large titans across the software industry.
With so many software stocks trading far below their 12 month highs, it is difficult to choose which to play on our watchlist. We already entered Intuit last month, which has returned 20% so far…now we’re looking to scale up in software and enter through one of the safest approaches, an ETF. The IGV ETF holds 119 software companies, with the biggest holdings being highly reputable names (the ones mentioned above among others). Rather than trying to pick a single stock and taking on the risk, the ETF gives exposure the industry as a whole.
Near-term risks:
Although $IGV is trading well-below its highs, its reversal may not be smooth and quick. A strong U.S. dollar impacts tech and software stocks because it makes the services more expensive to sell abroad. This may act as a near-term headwind and increase volatility, therefore we’ll be starting small and scaling up on this position as it develops and headwinds cool.
Please note that the stock includes risks and price targets are subject to change based on market developments and company updates. These stocks usually take time to come around. Wanna see real-time market updates? Learn more here.
Costco (COST)
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A good name to start small and add to overtime using the "DCA" strategy. If you don’t know what that is, let me know.
Costco has long been viewed as one of the market’s strongest defensive stocks, and that reputation only grows during periods of economic uncertainty. The company’s membership based model creates a recurring, highly predictable revenue stream that is less sensitive to economic cycles renewal rates north of 90% demonstrate just how durable that foundation is. Even when consumers tighten spending, they tend to keep their Costco membership because of the value it provides on essential goods like groceries, household items, and fuel.
Additionally, Costco’s scale gives it stronger pricing power and negotiating leverage during inflationary or supply chain strained periods. The retailer can absorb cost pressures better than peers, allowing it to pass savings to members while maintaining healthy traffic trends. This “value moat” becomes even more attractive when consumer confidence softens, often leading to increased visits as shoppers consolidate trips and look for lower prices.
Last quarter, Costco posted 9.2% revenue growth and even stronger net income growth compared to a year ago. E-commerce is a bright spot, where digital sales rose 21.7% year over year, and the company is expected to maintain high growth through geographic expansion and deeper digital engagement.
Historically, Costco has outperformed broader retail and market indices during volatile periods because its core business is built around essentials, not discretionary items. With steady foot traffic, resilient same store sales, and disciplined inventory management, Costco often acts as a safe harbor for investors seeking stability across uncertain economic cycles.
Room for improvement:
Although Costco is efficient, it can still be better. The stock’s current price to earnings ratio of 50x makes it higher than peers and may hold it back in the short term. But as profits grow and the earnings multiple gets adjusted, it’ll likely begin to attract buyers again. Costco is a choice for those who have a long timeline and want to slowly add a defensive play to a portfolio.
Please note that the stock includes risks and price targets are subject to change based on market developments and company updates. These stocks usually take time to come around. Wanna see real-time market updates? Learn more here.
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You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
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You've reached the end of our complimentary public watchlist. Unlock for the full list by becoming a member of our Hyper Stocks community. Click here to unlock more high probability set-ups!
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always conduct your own research or consult with a licensed financial advisor before making investment decisions.
Hyper Stocks and its contributors may hold positions in some of the securities or assets mentioned above. These positions are subject to change without notice. Any opinions expressed reflect current views at the time of writing and are not guarantees of future performance. Past performance does not guarantee future results.