Bull markets are built on rotation. 

The hot money rides the strongest trends until they begin to lose steam, then searches for the sector or industry that could be the next big winner.

Intra-tech rotation has dominated this bull cycle. Now that the market has absorbed the Iran war news cycle and pushed it to the back burner, AI is back to powering the averages higher. 

You've had a front-row seat to the action as memory mania has taken the market by storm over the past few weeks, launching Micron (MU) to staggering heights.

These blistering AI rallies have produced some incredible short-term winners as speculators pile into short-dated calls, helping to squeeze these stocks into the stratosphere. 

But they'll need to consolidate at some point — and that same hot money will need to find another target.

While the furious AI rallies have dominated the tape this year, they've also masked some incredible opportunities across other areas of the tech sector. 

There's a promising snapback trade emerging this month from the rubble of a massive AI-induced selloff. 

Investors left these stocks for dead over the winter, but they're beginning to realize their mistake as this group rallies back toward its highs.

The Selloff Nobody Saw Coming 

Manias work both ways. Speculators are practically foaming at the mouth to buy shares of memory stocks like MU at any price. 

But you'll also see situations where they'll trample anything in their path to sell sectors that quickly fall out of favor, tossing away great companies alongside the rotten stocks leading the declines.

This is exactly what happened during the software stock meltdown earlier this year. 

Anthropic released its latest iteration of Claude in February, and all hell broke loose in the software space. 

Startup founder and blogger Shane Collins even went as far as to call Anthropic "software murderers," potentially killing the entire software-as-a-service (SaaS) industry.

Investors immediately panicked, erasing a staggering $830 billion from the global software industry in just seven days. The carnage continued through early spring. 

The iShares Expanded Tech-Software ETF (IGV) had already topped out in late October, and its decline accelerated into a full waterfall selloff by the first quarter. Despite a quick relief rally in early March, it wasn't able to hammer out a low until early April.

All told, IGV lost nearly 40% of its value in a little more than five months. Keep in mind, this is not a basket of obscure SaaS startups. 

IGV's core holdings include blue chips such as Microsoft, Oracle, and Salesforce – industry-leading giants and household names that have dominated the space for decades.

While there's little doubt artificial intelligence will disrupt the software space, it's also obvious that skittish investors sold off more than a few quality stocks during the software massacre. 

Now that the sector has found a floor, these stocks are roaring back to life.

The Snapback Is Underway and Cybersecurity Is Leading It

IGV found a floor in April after briefly falling to fresh two-year lows. The initial move off the lows happened at a breakneck pace, and after some constructive consolidation, we're starting to see the beginnings of a bigger breakout.

IGV snuck below its February lows briefly in early April, but buyers quickly stepped in to push it back into its choppy range. Now that the ETF has broken above its March-April highs, the bottoming process is complete and buyers are back in control.

Of course, some of the poorly positioned software stocks won't recover as quickly, if they recover at all. Earnings season for the software names has been feast or famine, with investors punishing companies for mediocre results and sending them to new lows. 

The best-positioned names are separating from the losers that remain stuck in ugly downtrends — and one of the strongest emerging groups is cybersecurity.

Datadog (DDOG) earnings were one of the initial catalysts. The company crushed top- and bottom-line estimates earlier this month, sparking a one-day 30%-plus rally that has since carried the stock to new all-time highs. 

Fortinet (FTNT) followed suit, rallying 20% on the back of its own strong earnings report and breaking to new all-time highs this month as well.

A cybersecurity renaissance makes sense here, even in the age of AI disruption. Fortune 500 companies aren't going to suddenly hand over the keys to their web security to an AI agent.

The breadth of the move makes this more than a one- or two-stock story. The Amplify Cybersecurity ETF (HACK) — a basket of the best names in the industry — has rallied back above its October highs.

Cybersecurity leadership is beginning to show itself across the board. CrowdStrike (CRWD) doesn't report earnings until next week, yet the stock is already rallying to new all-time highs. 

And Palo Alto Networks (PANW) also broke out to new highs after rallying off its selloff lows. It's nothing but blue skies for these industry-leading names.

The software meltdown triggered a bout of temporary insanity that led investors to throw away their shares as they feared the worst. 

Now they're scrambling to buy them back at higher prices. 

With the herd still fixated on the parabolic semiconductor rally, any additional rotation into these beaten-down software names could spark the next leg of this powerful recovery.