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For most investors, a stock market crash is a painful, unpleasant experience that results in sleepless nights and a lot of stress. But for intelligent investors, they’re an amazing opportunity for making potentially huge long-term gains.
And when leveraged correctly using an ISA, it can drastically accelerate the journey towards financial freedom. Here’s how.
Capitalising on volatility
When investors panic, they’re often quick to sell businesses in their portfolio as an attempt to prevent losses, regardless of whether these businesses are actually in trouble.
This knee-jerk reaction, driven by a lack of emotional discipline, is what smarter investors can exploit to target outsized, long-term returns. And right now, such an opportunity could exist within the tech sector.
Earlier this month, many technology stocks were slammed. Microsoft and Amazon have seen their market-caps tumble by double digits. And for some software vendors including Atlassian and Duolingo, the losses have stretched by almost 50% since the start of 2026!
It’s not just US stocks getting sold off. UK businesses such as RELX, Softcat and Kainos Group (LSE:KNOS) have also seen their shares get caught in the panic-selling crossfire.
The primary cause of this sell-off seems to be panic about artificial intelligence (AI) disruption, causing some software enterprises to potentially become obsolete. After all, why pay for expensive software-as-a-service licenses when an AI model can do just as good a job at a much lower cost?
It’s a valid concern. But right now, investors seem to be throwing the baby out with the bathwater. And that’s where intelligent investors can potential unlock some impressive long-term gains.
Let’s zoom in on Kainos Group. The digitalisation and software specialist’s shares have tumbled by around 25% since the start of the year, once again driven by concerns of AI disruption.
Is this justified? There’s an argument to be made that Kainos could be in trouble. After all, the firm derives a large chunk of its revenue from digitalisation consultancy services – an area where generative AI is already taking market share.
However, recognising the disruptive potential of AI on its business years ago, management’s been steadily pivoting away from its dependency on consultancy. As such, the group’s been building out a suite of complex software tools that plug directly into the Workday platform to handle mission-critical tasks like compliance, data security, and process automation.
This part of the business is still relatively small. But it’s expanding rapidly and in the long-run, is expected to eventually dominate the revenue stream. And with the Workday platform so heavily integrated into its customers’ operations, replacing this entire ecosystem with AI tools seems very unlikely.
Meanwhile, the Kainos short-term outlook also appears quite strong. It’s now the fifth-largest AI supplier to the UK public sector, with pre-approved government contracts running through 2026 and 2027. In other words, AI may not actually be a threat. Instead, it looks like an opportunity.
Transitioning from an implementation specialist to an AI-native platform is no easy feat. There’s no denying that significant execution risk surrounds this business. But with the stock now 25% cheaper, that’s a risk I’m seriously considering. And it’s not the only sold-off stock that I’ve got an eye on right now.
