We were stopped out of XRO for a profit last week as the software space came under renewed selling after Anthropic launched Claude Managed Agents and Meta unveiled a new AI model. These chapters of AI news will undoubtedly keep coming but our view is the rerating across the software sector has run its course and the next ~20-25% move at least for WTC is on the upside after US peers made fresh 2025 lows on Friday night – initially we are looking to buy a new low in WTC but this may change during the week.
At this stage we prefer to be pedantic on our entry-points, after Morgan Stanley downgraded the ASX software stocks over the weekend, and of course the Middle East situation deteriorated.
- We believe the risk/reward will return to WTC if/when we see fresh multi-year lows.
Trade Idea: Buy WiseTech Global Ltd (ASX:WTC) at $35.25 with stops at $33.20 – 6% risk.
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