Important security note: Warning of attempted fraud in the name of DWS
We have detected that fraudulent individuals are misusing the "DWS" trademark and the names of DWS employees on the internet and social media. These fraudsters are operating fake websites, Facebook pages, WhatsApp groups and Mobile Apps. Please be aware that DWS does not have any Facebook Ambassador profiles or WhatsApp chats. If you receive any unexpected calls, messages, or emails claiming to be from DWS, exercise caution and do not make any payments or disclose personal information. We encourage you to report any suspicious activity to info@dws.com, including any relevant documents and the original fraudulent email. Additionally, if you believe you have been a victim of fraud, please notify your local authorities and take steps to protect yourself.
Americas CIO View
17/04/2026
Investing in a Fog of War and Haze of AI Transition
David Bianco
Chief Investment Officer, Americas
IN A NUTSHELL
- S&P 500 returns to highs upon ceasefire, but Software bombed to stone-age
- No country for software; the world belongs to AI: No terminal value, call in loans
- US investment spending isn’t afraid of expensive oil: Might be capex net positive
S&P 500 returns to highs upon ceasefire, but Software bombed to stone-age
The climbed to just 2% below its record high upon news of a tentative ceasefire agreement between the U.S. and Iran that would reopen the Strait of Hormuz. On this news, oil prices dropped to about $95/barrel from highs of about $115/barrel the prior week. While the decline in oil prices is real and welcome, an attack on Saudi Arabia’s East-West oil pipeline to the Red Sea just hours after the ceasefire and nearly no traffic in the strait with Iran openly demanding that ships obtain clearance and pay tolls to transit, makes this 2 week ceasefire to negotiate a peace deal in Pakistan seem tenuous. Iran says the U.S. is also in violation and demands that Israel withdraw forces in Lebanon that are pursuing Hezbollah.
We take a cautious stance on this ceasefire rally and have shifted our view on the S&P 500’s next meaningful move from balanced risk to downside risk. We still think the S&P likely will stay in a 6000-7000 range and perhaps tighter through summer. But near the top-end of this range is unattractive reward for the risk in our view given the still hot conflict, still high oil prices, and perhaps more worrisome for the value of assets, 10-year Treasury yields still over 4.25%. In another conflict, the asset that appears to have bombed hardest before and during the Iran war is Software.
No country for software; the world belongs to AI: No terminal value, call in loans
Investors see regime change ahead that’s potentially terminal for many business application software companies as new and advanced (AI) services displace software and the people who use it. The S&P 500 Software industry is down 7% since the start of March and down 26% year-to-date (YTD). Tech Software & Services down 26% YTD, but Tech Hardware w/ Semiconductors up 19%. The concerns deepening for large and publicly listed software companies are generally magnified for smaller and privately held software companies that have tapped into credit.
A panic appears to be developing around the appropriate and terminal value of software companies. Recently demonstrated new capabilities and revenue lifting off powerfully at the private AI titans have, in our view, shifted the magnitude and duration of addressable market capture forecasts from software (and human payroll) to AI enterprises. Software businesses might now be valued as finite , no longer growth . Which may call into serious question debt refinancing risks. However, all of this may present opportunities for selective investors and the software companies that transition and adapt.
As bears growl software is un-investable or the fair under 15, we offer a few constructive reminders about S&P Software companies. Microsoft dominates S&P 500 Software (4.8% of 7.7% industry weight); it’s a behemoth of applications, systems and security software and a cloud hosting datacenter titan with AI capabilities and partnerships not to be underestimated. Other S&P Software stocks are mostly network security, advanced chips design and meta data analytics software. More AI likely means the more need for such soft tech. Furthermore, and relevant for software firms used by humans for sales, tax, engineering, creative design and distribution, we see value in their enviable scale and incumbency with customers and user networks. Many appear well positioned to enhance their services with AI add-ons and pull further ahead of smaller competitors now likely eager to sell or merge.
While AI is impressive, there doesn’t appear to be a monopoly on it. Innovation here is fast with multiple players now and more to come. We generally favor S&P Software with preferences within it. We favor the largest companies with strong net cash , and we subtract from earnings in our valuation assessment. While we view employee stock options as an expected operating expense, we don’t think companies should exclude option expense from non-GAAP () earnings measures. Lots of options are far now, we will watch carefully for any reissuance or repricing. We expect transparency and alignment with shareholder interests.
US investment spending isn’t afraid of expensive oil: Might be capex net positive
We’re concerned about real consumer spending and home building and improvement given higher oil and since the conflict. However, we see the U.S. economy at safe distance from , aided by enhanced tax refunds and tariff refunds soon to come. We still see strong growth, 0.5% to , in datacenter related . What appears to be unwavering commitment to spend on AI chips and tech hardware as confidence rises in adequate for the super AI datacenters. Moreover, the massive energy needs of AI in a less peaceful world hastens investment in on-site and independent power generation. Beyond Liquefied Natural Gas (LNG) for export, US oil & gas capex might be on the verge of a broader upturn. For these reasons, our 2026 estimated S&P remains $310 and ~21.5 times is seen as fair in our view.