Live Markets: A recovery effort in the beleaguered software sector

Ameriprise Financial

15/04/2026 17:48

Nasdaq up ~0.8%, S&P 500 rises ~0.3%; Dow off ~0.5%

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A RECOVERY EFFORT IN THE BELEAGUERED SOFTWARE SECTOR

With the broader market gaining ground modestly, software stocks are outperforming on Wednesday.

The iShares Expanded Tech-Software Sector ETF IGV.N and the S&P 500 software and services index .SPLRCIS were rallying more than 3% each on the day while the ETF and the index were both angling for three-session winning streaks with gains of about 10%.

But while this week's software gains look very impressive against the broader market rally, it must be noted the months-long backdrop of weakness in the sector cannot be ignored.

Investors have been fleeing the sector on concerns that artificial intelligence would bring highly disruptive competition to it after product releases from Anthropic earlier this year.

And even with the most recent advance the IGV is still down about 22% year-to-date while the SPLRCIS is off about 19% year-to-date.

But the current rebound may be a sign that investors are rethinking the impact of AI on the software industry, according to Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

"Anthropic’s press releases, showing how well Claude writes software, allowed investors to dream of a world where machines guide themselves. Today they are re-evaluating that opinion,"  said Forrest.

While the software industry may well be disrupted by AI, Ameriprise's chief market strategist, Anthony Saglimbene, said that investors are starting to gain some perspective on the companies in question and looking for bargain opportunities in a sector that he described as the recent "epicenter for declines."

"Investors are walking away from this really negative view of software, that AI is going to put all these companies out of business,"  said Saglimbene.

"They're realizing that these companies are profitable. Yes, they probably will adopt AI and there could be some disruption, but at the end of the day, these are solid companies that have seen their valuations severely taken back. And so investors are looking at some of the opportunities in software and acting on them."

From a technical perspective, however, Adam Turnquist, chief technical strategist for LPL Financial in Charlotte, North Carolina, was in wait-and-see mode.

In his Tuesday research note looking at the S&P 500 North American Technology Software Index, Turnquist wrote that the rally represented "an important step in the right direction" but he noted that several resistance levels remained in place, making it too soon to call "a durable low."

On Wednesday, with the sector rallying for a third day, he told Reuters via email that "signs of a potential bottom are emerging."

"Extremely oversold conditions followed by improving momentum and volume measures all suggest seller enthusiasm is waning," Turnquist said. "Fear over AI disrupting the entire space is still present but has moved beyond fever pitch, supported by improving earnings estimates and historically attractive valuations."

In the S&P 500 software index, the leader of the rally is Oracle ORCL.N, which is up 4% on Wednesday and on track for a four-session rally of 23%.

(Sinéad Carew)

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