Shares of several U.S. software companies gained on Tuesday, signaling a potential recovery after being battered by AI disruption fears.
The rebound coincided with a slide in chipmaker stocks, which had rallied to record highs earlier this month.
The iShares Expanded Tech-Software Sector ETF hit its highest level since January. Workday, ServiceNow, and Salesforce rose between 1.4% and 2.4%.
Cybersecurity firms CrowdStrike, Okta, SailPoint, and Zscaler gained 1% to 2.6%. The Amplify Cybersecurity ETF touched an all-time high.
Analysts see attractive opportunities in software, with some companies poised to benefit from AI rather than being disrupted.
Bank of America gave ServiceNow a "buy" rating but reinstated Salesforce with "underperform," highlighting a structural shift.
The market is distinguishing between traditional subscription models and AI-centric firms. However, the rally needs to extend further to convince skeptics.
The iShares ETF is down 12.2% year-to-date, and the S&P 500 software index has lost 13.7%.
