Software stocks could be a good hedge for investors looking for some stability against an increasingly volatile macroeconomic backdrop and unstable market, according to HSBC. Mounting uncertainty around President Donald Trump’s tariff rollouts and fears of a weaker economy have rattled markets for the past five weeks, sending all three major averages down for the year. Many companies with more operations overseas and higher imported inputs have cut the financial guidance they give Wall Street, further shaking investors’ confidence in the profit outlook. While London-based HSBC sees the macroeconomy taking a hit, the bank doesn’t expect a U.S. recession. “HSBC economists expect U.S. real GDP growth to moderate to 1.9% in 2025 vs 2.8% in 2024 but do not expect a recession,” Stephen Bersey, HSBC’s head of U.S. technology research, wrote in a recent note. “Our own analysis indicates that the bulk of the short-term weakness could be attributed to actions taken by the Department of Government Efficiency (DOGE) and tariff concerns. However, over the medium term the DOGE steps could be viewed positively for companies in our coverage as they may allow lower corporate and personal tax rates, higher U.S. economic growth, lower inflation and lower interest rates.” Going forward, Bersey believes that software stocks could be an efficient hedge if the bull market corrects itself following this recent pullback. In the report, Bersey highlighted several technology stocks as potential buys, each with potential upside of more than 40% to his price target. “The software sector has become much less cyclical than in the past due to a sector-wide transition towards a subscription-based revenue model with long term, contracted, revenue commitments that provide better predictability to future revenues,” Bersey wrote. “Thus, if the macroeconomic weakness does indeed turn out to be a temporary effect of DOGE (as we think plausible), we see a minimal short-term impact on contracted revenue and medium-term underlying demand remaining strong.” A few of the stocks Bersey underscored are shown in the table below, alongside their HSBC price targets and potential upside, as of the time of the report. Amazon , the dominant e-commerce platform and parent of Amazon Web Services, was one name Bersey highlighted. The analyst’s $280 price target impies potential upside of about 43% from last Friday’s close. Shares of Amazon have shed nearly 12% this year, but are about 8% higher over the past 12 months. “While tariff-driven macro uncertainty and DeepSeek likely played their part, we believe that, fundamentally, not much has changed,” Bersey wrote. “Though operational comps are starting to get tougher, we remain confident that Amazon is well-positioned to capitalize on returns from its past strategic investments.” Bersey added that a return to normalcy should boost growth in Amazon Web Services. Fellow Magnificent Seven member Microsoft was another on HSBC’s list. The tech titan has similarly slipped 9% in 2025 but more than 11% over just the past three months. Bersey believes that analysts aren’t fully pricing in the potential growth from Azure, Microsoft’s cloud computing platform. “Our FY27 revenue and non-GAAP EPS forecasts are 16% and 20% ahead of consensus,” he wrote. “We believe the consensus is underestimating the company’s ROI yield from Azure investment.” Bersey’s $598 price forecast implies that shares of Microsoft could rally roughly 53% from current levels. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
