Down go the software stocks.

Once investors are done selling top FAANG names such as Facebook (FB) and Amazon (AMZN) , they may jump to unloading pricey software names like Adobe (ADBE) . 

"Such strong performance for the software group in the first quarter makes us nervous that they can't continue to appreciate at the same pace over the remainder of the year, so we wouldn't be at all surprised or concerned if the group trades sideways, or even gives back some of its early 2018 gains over the next few months," cautions Credit Suisse analyst Michael Nemeroff. The analyst continues to think "exogenous geopolitical or black swan threats", or a faster pace of interest rate increases will upset the surging software space. 

The software sector has been on a hot streak to say the very least. It has notched double-digit percentage annual returns for each of the last two years, according to Credit Suisse data. In the first quarter, returns hit 20.5%, slowing from the 41.2% pace seen in 2017. A good chunk of the gains have come among mid-cap software names. 

But a quick glance at the below chart shows software stocks are anything but cheap right now. In a market of rising interest rates, this explosive sector may see investors cash out and search for better values. 

Companies in Credit Suisse's software coverage universe: ADBE, (ALRM) , (AMBR) , (APPF) , (APTI) , (ATHN) , (BL) , (BLKB) , (CALD) , (CARB) , (COUP) , (CRM) , (CSOD) , (CSLT) , (ECOM) , (EVBG) , (ELLI) , (HUBS) , (INST) , (LOGM) , (LPSN) , (MB) , (MDSO) , (MODN) , (MULE) , (NEWR) , (NOW) , (PAYC) , (PCTY) , (PFPT) , (QLYS) , (RNG) , (RP) , (SHOP) , (SNCR) , (SPSC) , (TEAM) , (TLND) , (TWLO) , (ULTI) , (VEEV) , (WAGE) , (WDAY) , (WK) , (ZEN)  

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