Castle Securities: US retail investors are going crazy "bottom fishing" in software stocks, with the amount of funds "sweeping" reaching a historical new high.

After the software stocks plummeted under threat from artificial intelligence tools, Wall Street is reevaluating the possibility of being oversold, while retail investors are lining up to buy on dips. According to Scott Rubner, head of stock and stock derivative strategy at Castle Securities, retail traders have set a new record in spending on software stocks on the Castle Securities platform. The company has been tracking this data since 2017. Rubner wrote in a report to clients on Tuesday, "The net nominal amount on our platform has reached unprecedented levels. The scale, duration, and breadth of buying activity are significantly above previous peaks, highlighting retail investors' role as a primary source of new demand in early 2026." Since Anthropic PBC launched an efficiency tool tailored for in-house legal teams, all related companies, from small software developers to large wealth management companies, have been affected by the selling wave. Legal software and publishing stocks subsequently experienced a sharp decline. The downturn worsened after Altruist Corp. introduced a tax strategy tool, leading to a decline in the stock prices of Charles Schwab Corp (SCHW.US) and LPL Financial (LPLA.US). Full Buy-In The selling wave in the software sector has spread to the entire market, with investors selling stocks of companies perceived to be replaceable by artificial intelligence technology, even with minimal risk. While professional investors, including hedge funds, are increasing their short positions at a record pace, retail investors hold the opposite view, buying on dips. From January 2 to February 13, the daily average demand for US stocks on the Castle Securities platform was about 25% higher than the peak in 2021, and twice the average level from 2020 to 2025. Retail demand is no longer limited to the tech sector. The company's data from the beginning of the year shows that this group favors industries such as materials, real estate, finance, communication services, and industrial sectors. This momentum has also spread beyond the equities market. In 2026, retail participation in the options market has reached historically high levels. The daily average options trading volume so far this year is nearly 50% higher than the average level from 2020 to 2025, and more than 15% higher than the same period last year. Rubner wrote, "In the past 42 weeks, retail options investors have tended to be net buyers for 41 weeks, indicating a sustained risk appetite rather than sporadic position changes."