The software sector has been anything but calm lately. These stocks were the darlings of Wall Street for the past few years but are now taking a beating due to tariff-related uncertainty and worries about AI’s lack of profitability.
News headlines have been almost entirely negative in the past two months due to weak macro data and big companies’ disappointing earnings results. This has caused a pivot toward profitability over growth.
Volatility often hides opportunity, and many of these software stocks are now oversold and can rebound when sentiment shifts. As such, it’s worth looking into the stocks that have plunged the most.
A close-up of a laptop screen, displaying graphically enhanced programming for a software project.
Methodology
For this article, I screened the worst-performing software stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15. Globant SA (NYSE:GLOB)
Number of Hedge Fund Holders In Q4 2024: 25
Globant SA (NYSE:GLOB) is a digitally native technology services company that provides software solutions.
The stock is down significantly so far in 2025 due to its Q4 2024 earnings report being underwhelming. The company reported $642.5 million in revenue, 0.2% below analyst expectations.
Although it beat earnings per share estimates with $1.75 vs. $1.74, the slight miss on the top line spooked investors and triggered a sell-off.
Competitive pressures in the IT services sector have played a role. Globant operates in a crowded market with rivals like EPAM Systems and Accenture, and new entrants are vying for digital transformation contracts.
This competition, paired with a perceived slowdown in demand, has eroded investor confidence in Globant’s ability to maintain its historically high growth rates.
The consensus price target of $219.71 implies 68% upside.
GLOB stock is down 39.05% year-to-date.
14. Core Scientific Inc (NASDAQ:CORZ)
Number of Hedge Fund Holders In Q4 2024: 66
Core Scientific Inc (NASDAQ:CORZ) is a Bitcoin mining company that is transitioning into a high-performance computing (HPC) company.
The stock is down significantly so far in 2025 as the company reported disappointing financials in Q4 2024, with a net loss of $265.5 million and revenue dropping to $94.9 million from $141.9 million the previous year.
The broader cryptocurrency market has also pressured Core Scientific. Bitcoin mining profitability has weakened due to rising network difficulty and the April 2024 Bitcoin halving, which cut mining rewards in half.
These factors have squeezed margins for miners like Core Scientific. Meanwhile, the company’s shift to HPC and AI infrastructure has not yet offset these losses fully.
The consensus price target of $19 implies 124% upside.
CORZ stock is down 39.50% year-to-date.
13. Palladyne AI Corp (NASDAQ:PDYN)
Number of Hedge Fund Holders In Q4 2024: N/A
Palladyne AI Corp (NASDAQ:PDYN) makes AI and machine learning software for robotic systems.
The stock is down significantly so far in 2025 as volatility in small-cap tech stocks has intensified, and investors have rotated away from high-growth, speculative names like PDYN toward more stable assets.
Plus, the company’s revenue, while up 27% year-over-year in 2024, remains modest at $7.79 million.
Investor sentiment has also shifted because of Palladyne’s unproven commercial traction. The company launched its Palladyne IQ and Palladyne Pilot products for industrial robots and drones, with customer trials slated for 2025.
However, without significant contracts or revenue growth reported yet, uncertainty persists. This lack of tangible progress has fueled profit-taking after last year’s rally.
The consensus price target of $15 implies 103.8% upside.
PDYN stock is down 39.93% year-to-date.
12. Ibotta Inc (NYSE:IBTA)
Number of Hedge Fund Holders In Q4 2024: 15
Ibotta Inc (NYSE:IBTA) is a technology company that operates the Ibotta Performance Network (IPN). This is a platform enabling consumer packaged goods brands to deliver digital promotions to over 200 million consumers.
The downward trend began after its initial public offering in April 2024, which marked it as Colorado’s largest tech IPO. However, the stock has struggled to maintain its early momentum.
In its Q4 2024 earnings, released on February 26, 2025, Ibotta reported a 1% year-over-year revenue decline to $98.4 million, missing analyst forecasts. Although full-year 2024 revenue grew 15% to $367.3 million, growth has slowed significantly from prior years, and Q1 2025 guidance projected revenue between $80 million and $84 million, well below the consensus estimate of $90.96 million.
A critical blow came from a March 20, 2025, report by short-seller The Bear Cave. The report cited waning consumer support, severe employee dissatisfaction, strained partner relationships, and allegations of fraud.
IBTA stock is down 40.06% year-to-date.
11. PSQ Holdings Inc (NYSE:PSQH)
Number of Hedge Fund Holders In Q4 2024: 9
PSQ Holdings Inc (NYSE:PSQH) operates an online marketplace and payments ecosystem.
The stock is down significantly so far in 2025 despite impressive revenue growth (e.g., a 222% increase to $6.5 million in Q3 2024 compared to Q3 2023).
PSQ Holdings remains unprofitable, and investors are losing confidence because the company has delayed its goal of achieving positive cash flow from 2024 to late 2025.
It surged over 270% in a single day in December 2024 after announcing Donald Trump Jr.’s appointment to the board, but it has since struggled to maintain those gains. Moreover, PSQ Holdings operates in a niche market targeting a “parallel economy” for value-driven consumers, which could limit its growth compared to broader e-commerce platforms.
The consensus price target of $6 implies 125.14% upside.
PSQH stock is down 41.41% year-to-date.
10. BILL Holdings Inc (NYSE:BILL)
Number of Hedge Fund Holders In Q4 2024: 64
BILL Holdings Inc (NYSE:BILL) provides a cloud-based financial operations platform that helps small and midsize businesses automate accounts.
The stock is down significantly so far in 2025 due to the company releasing disappointing Q3 FY2025 guidance. It projects revenue growth of only 9-11% year-over-year compared to the prior quarter’s 14% growth.
Subscription fee growth has also declined to 7% year-over-year and take rates have reduced. Multiple firms have since downgraded.
The consensus price target of $80.9 implies 68.87% upside.
BILL stock is down 43.43% year-to-date.
9. Agilysys Inc (NASDAQ:AGYS)
Number of Hedge Fund Holders In Q4 2024: 20
Agilysys Inc (NASDAQ:AGYS) sells software solutions and services tailored for the hospitality industry.
The stock is down significantly so far in 2025 due to disappointing quarterly results reported in January 2025.
Agilysys reported earnings per share of $0.38, beating estimates of $0.34. However, revenue came in at $69.6 million against expectations of $73.1 million in Q3 FY2025. Investors reacted negatively to this revenue miss, and the stock plummeted.
The revenue shortfall stemmed from ongoing pressures in point-of-sale (POS) system sales and delays in project implementations. These issues disrupted the company’s growth momentum, which had been fueled by strong subscription revenue and acquisitions like Book4Time in prior quarters. Analysts noted that while subscription revenue grew, the weaker POS segment and implementation hiccups raised concerns about near-term growth consistency.
Market sentiment also shifted due to broader economic factors affecting the hospitality sector, which is a key market for Agilysys. Rising operational costs and cautious spending by hospitality businesses may have slowed adoption of new software solutions.
The consensus price target of $127.5 implies 72.93% upside.
AGYS stock is down 44.02% year-to-date.
8. SoundHound AI Inc (NASDAQ:SOUN)
Number of Hedge Fund Holders In Q4 2024: 21
SoundHound AI Inc (NASDAQ:SOUN) makes voice artificial intelligence solutions and sells them to businesses.
The stock is down significantly so far in 2025 due to SoundHound’s struggle with consistent revenue growth in its core business.
The company reported a record Q4 2024 revenue of $34.5 million, up 101% year-over-year. Revenue from its original operations, excluding 2024 acquisitions, has weakened. This inconsistency has raised red flags for investors who expected sustained organic growth.
Profitability remains elusive for SoundHound, and this has added pressure on the stock. The company posted a GAAP net loss of $351.10 million in 2024, a 282.8% increase from 2023, despite revenue growth to $84.69 million. Investors are wary because the firm has yet to achieve positive earnings, even though management aims for adjusted EBITDA positivity by the end of 2025.
The consensus price target of $12.86 implies 30.4% upside.
SOUN stock is down 50.30% year-to-date.
7. Flywire Corp (NASDAQ:FLYW)
Number of Hedge Fund Holders In Q4 2024: 34
Flywire Corp (NASDAQ:FLYW) is a global payments enablement and software company that facilitates complex payment processes.
The stock is down significantly so far in 2025 as it cited an $8 million revenue shortfall, largely due to Canada’s new student visa caps and strained diplomatic relations between India and Canada, which reduced its Canadian revenue by 35%.
The education sector, Flywire’s largest market, relies heavily on international students paying tuition through its platform. Canada’s visa restrictions have limited the number of incoming students. This policy shift directly cut into Flywire’s transaction volume.
The consensus price target of $19.23 implies 93% upside.
FLYW stock is down 51.72% year-to-date.
6. The Trade Desk Inc (NASDAQ:TTD)
Number of Hedge Fund Holders In Q4 2024: 63
The Trade Desk Inc (NASDAQ:TTD) operates as a technology company that provides a self-service, cloud-based platform.
The stock is down significantly so far in 2025 as its Q4 2024 earnings report missed its own guidance of $758 million. This marked the first time in over eight years as a public company that it fell short of expectations and shook investor confidence.
CEO Jeff Green attributed the miss to “small execution missteps,” including internal restructuring and personnel changes, which disrupted performance.
It posted 22% year-over-year revenue growth and a 44% increase in adjusted EPS. However, the miss triggered a sharp sell-off. The stock plunged immediately following the earnings release. There have also been many lawsuits since.
The consensus price target of $116.41 implies 106.74% upside.
TTD stock is down 52.09% year-to-date.
5. Bitdeer Technologies Group (NASDAQ:BTDR)
Number of Hedge Fund Holders In Q4 2024: 31
Bitdeer Technologies Group (NASDAQ:BTDR) is a technology company focused on providing blockchain and high-performance computing.
The stock is down significantly so far in 2025 due to the decline in Bitcoin. BTC’s value directly impacts Bitdeer’s revenue since its core business relies heavily on mining and hash rate services tied to cryptocurrency prices.
The Bitcoin halving event in April 2024 reduced mining rewards, squeezing profitability for miners industry-wide. Although Bitdeer has diversified with innovations like the SEAL02 chip and AI computing services, these efforts haven’t fully offset the immediate financial strain.
The consensus price target of $21 implies 109.79% upside.
BTDR stock is down 53.81% year-to-date.
4. Arqit Quantum Inc (NASDAQ:ARQQ)
Number of Hedge Fund Holders In Q4 2024: 8
Arqit Quantum Inc (NASDAQ:ARQQ) provides cybersecurity services through its QuantumCloud platform.
Investors are worried about most quantum computing stocks as profitability is still far away. The D-Wave breakthrough and Microsoft’s quantum chip did add some hype, but that doesn’t change anything for Arqit Quantum.
In February 2025, Arqit raised $13.6 million through a registered direct offering of shares at $2.50 each, along with issuing warrants for additional shares. Dilution like this is lucky as quantum computing is far from being profitable.
The consensus price target of $52 implies 193.29% upside.
ARQQ stock is down 54.38% year-to-date.
3. Rezolve AI Ltd (NASDAQ:RZLV)
Number of Hedge Fund Holders In Q4 2024: 5
Rezolve AI Ltd (NASDAQ:RZLV) makes AI for digital commerce.
The stock is down significantly so far in 2025 as the company’s financial struggles weigh heavily on the stock.
Rezolve AI has high debt levels at $45.4 million and negative book value per share.
The company did make moves like the $1 billion Bitcoin treasury announcement in February 2025 but many see this as risky and as something that distracts from core operations. It is also acquiring GroupBy for $55 million. It doesn’t have the cash for such a big acquisition, so it’ll likely be dilutive or add more debt.
The consensus price target of $6.4 implies 287.88% upside.
RZLV stock is down 56.68% year-to-date.
2. Digimarc Corp (NASDAQ:DMRC)
Number of Hedge Fund Holders In Q4 2024: 11
Digimarc Corp (NASDAQ:DMRC) makes digital watermarking technologies that provide automatic identification solutions for commercial and government customers worldwide.
The stock is down significantly so far in 2025 as Digimarc reported a net loss of $0.40 per share in Q4 2024, which improved from $0.52 the previous year. However, this still signals ongoing profitability struggles.
Revenue for the quarter was $8.65 million and fell short of the $10.81 million expected by analysts.
Investors are growing wary because the company continues to post net losses, with a Q4 2024 loss of $8.6 million. The market has punished this lack of profitability.
Digimarc also announced a workforce reduction of 90 employees (40% of its staff) in Q4 2024 to cut costs and target positive non-GAAP net income by Q4 2025.
The consensus price target of $29 implies 102.66% upside.
DMRC stock is down 61.79% year-to-date.
1. Triller Group Inc (NASDAQ:ILLR)
Number of Hedge Fund Holders In Q4 2024: 12
Triller Group Inc (NASDAQ:ILLR) sells an AI-powered tech platform that integrates social media and financial services.
Triller Group has faced persistent operational losses and reported a net loss of $12.4 million on just $5.4 million in revenue in the most recent quarter.
On February 28, 2025, Director Robert E. Jr. Diamond sold 129,275 shares at an average price of $1.04. This followed earlier sales by the same director in January, which collectively led to a significant drop in stock price due to a perceived lack of trust in the company’s future.
Moreover, it raised $50 million in equity funding through private placement in early February 2025, which diluted existing shareholder value and contributed to a sharp decline in its price.
The merger with AGBA Group in October 2024 was intended to boost its valuation to $4 billion but has not yet delivered the anticipated stability or growth. Instead, the company has been languishing.
The stock is down significantly so far in 2025.
ILLR stock is down 67.39% year-to-date.
While we acknowledge the potential of ILLR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ILLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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