By Sinéad Carew
June 3 (Reuters) - Software stocks have rebounded from a punishing selloff as investors are betting that AI may boost the sector rather than leaving it for dead.
The iShares Expanded Tech-Software Sector ETF has surged nearly 42% from its April low, turning fears that AI would rip the heart out of the industry into hopes that software firms will enlist AI as a valuable ally. The software ETF is down under 2% for 2026 after earlier falling 30%.
Now investors are flocking to firms they see succeeding at integrating AI and adjusting price models by charging clients based on actual usage – while steering clear of firms that are too dependent on traditional pricing, which involves subscription fees based on headcount.
Analysts and portfolio managers point to security providers Datadog and Palo Alto Networks, chip design software developer Synopsys and giants Oracle and Microsoft as some of their favorites.
June 3 (Reuters) - Software stocks have rebounded from a punishing selloff as investors are betting that AI may boost the sector rather than leaving it for dead.
The iShares Expanded Tech-Software Sector ETF has surged nearly 42% from its April low, turning fears that AI would rip the heart out of the industry into hopes that software firms will enlist AI as a valuable ally. The software ETF is down under 2% for 2026 after earlier falling 30%.
Now investors are flocking to firms they see succeeding at integrating AI and adjusting price models by charging clients based on actual usage – while steering clear of firms that are too dependent on traditional pricing, which involves subscription fees based on headcount.
Analysts and portfolio managers point to security providers Datadog and Palo Alto Networks, chip design software developer Synopsys and giants Oracle and Microsoft as some of their favorites.
1 day ago
