A Friday bounce may have left some investors feeling better heading into the weekend, but a violent sell-off in tech names focused on the software industry this past week had Wall Street strategists trying to steady clients’ nerves across the investment world.

Software names were crushed on Tuesday, Wednesday, and Thursday last week as investors priced in even more aggressive disruptions to these businesses amid AI advances, with the uptake of Anthropic’s Claude Code the latest source of angst.

And despite a rebound on Friday, the tech-heavy Nasdaq posted a weekly decline of more than 2%, with software giants Salesforce (CRM) and ServiceNow (NOW) shares falling more than 9%, among a host of other names in the space that also dropped.

Still, the magnitude of the selling had several strategists urging patience and suggesting these moves may have actually overshot the potential risks facing these industries.

“You’re getting to a point where this probably seems overdone,” Invesco chief global market strategist Brian Levitt told Yahoo Finance last week. “We’ve seen some names taken out pretty significantly.”

“Clearly, there’s concern about what some artificial intelligence programs are going to mean for different software businesses, but we’ve seen some names taken out pretty significantly,” he added.

Strategists believe the disruption won’t be severe across all companies.

“Larger software companies that are positioned to adapt, [they’re] going to be fine,” said JonesTrading chief market strategist Mike O’Rourke. “The problem is there are new risks out there.”

O’Rourke said productivity commentary during Alphabet’s earnings call only reinforced “the alarm” the market has sounded about AI agents.

Earnings from Big Tech giants over the last week also revealed the sheer amount of capital being poured into AI, as capital expenditures from Amazon (AMZN), Alphabet (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) are set to top $650 billion.

“Investors are now kind of being more discerning,” Dave Mazza, CEO of Roundhill Investors, told Yahoo Finance on Friday.

“People are really pulling back before they begin to say, ‘How much do I want to value a company even if it’s growing,’ knowing that they’re moving from a capital-light industry to maybe a more capital-intensive industry?” he added.

Mazza mentioned that there are still areas of the market that remain undervalued, such as Consumer Staples (XLP) and Energy (XLE).

Notably, cyclical and defensive sectors have also outperformed tech (XLK), which is negative for the year.