Software stocks were thought to be a can't miss trade this year, but now they are struggling

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A slowing economy is forcing companies to spend less on information technology services, pressuring the high-flying software stocks that rely heavily on corporate dollars.

among many others in the software space, expects the names in its coverage group to generate about $320 billion in revenues in 2019, with more than 85% of that from corporate environments, the firm's Keith Weiss told CNBC. Zendesk reports earnings next week.

As companies start to report earnings, chief executives are warning about this very trend. Shares of WorkDay tanked 16% following its earnings. on its analyst day last week. "The one thing we don't know yet is will the uncertainty cause some delays in opportunities. We definitely seen some delays."Despite the correction in software stocks, Wall Street does not recommend leaving the sector.

Wald said the pullback wasn't that damaging for the group and "the previous leader is just pausing after a tremendous run and some of the laggards are playing a bit of near-term catch up."

 

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