Why did software stocks fall while the market rose?

Investors believe AI could reduce demand for traditional software, pressuring SaaS company revenues.

Which software companies are affected?

Affected companies include Salesforce (CRM), ServiceNow (NOW), and Snowflake (SNOW).

Is IGV a good investment now?

It depends on the investor's view. IGV is betting fears are overblown, but future performance hinges on company results.

AI Crushed Software Stocks. IGV Is Betting the 'SaaSpocalypse' Is Overblown

The iShares Expanded Tech-Software Sector ETF (IGV) is down 10.5% year-to-date, while the S&P 500 is up 10.8% and the Technology Select Sector SPDR is up 26%. The gap reflects market pricing that AI is a threat to software stocks, but IGV is betting the 'SaaSpocalypse' narrative is overblown.

July 6, 2026

2 min read

Source: 24/7 Wall St.

Key Numbers

IGV YTD return

-10.5%

S&P 500 YTD return

+10.8%

Technology Select Sector SPDR YTD return

+26%

According to 24/7 Wall St., the software sector is underperforming this year. The iShares Expanded Tech-Software Sector ETF (IGV) has fallen 10.5% year-to-date, compared to a 10.8% gain for the S&P 500 and a 26% gain for the Technology Select Sector SPDR. This wide divergence reflects a pessimistic market view of software companies amid the rise of artificial intelligence.

Details

Investors fear that AI could reduce the need for traditional software, threatening revenue growth for companies like Salesforce (CRM), ServiceNow (NOW), and Snowflake (SNOW). However, IGV, which holds these stocks, is betting that these fears are overblown and that the software sector will remain essential in the digital economy.

Context

The decline in IGV comes as major tech stocks like Nvidia and Microsoft surge on AI demand. But SaaS companies face headwinds from slowing enterprise spending and rising costs.

What This Means for Investors

Betting on IGV means believing that the software sector will adapt to AI rather than be replaced. Investors should monitor individual company earnings and guidance to assess the validity of this bet.

Frequently Asked Questions

The iShares Expanded Tech-Software Sector ETF (IGV) is an exchange-traded fund that focuses on software and technology companies.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.