Software Stocks Rebound as AI Monetization Hopes Ease Disruption Fears

Generative AI initially fueled fears that autonomous agents would bypass traditional software-as-a-service products, pressuring valuations across the sector. Investors are increasingly taking the opposite view: established vendors with proprietary customer data, embedded workflows and large distribution networks may be best placed to commercialize AI. BlackRock’s iShares Expanded Tech-Software Sector ETF, known by its IGV ticker, has become a closely watched gauge of that shift in sentiment.

IGV gained about 21% in May 2025, rebounding sharply from its lows as shares including Snowflake and Okta rallied. Analysts also flagged Salesforce, traded as CRM, and ServiceNow, traded as NOW, as undervalued candidates for further gains in the second half. The bullish case is that AI agents embedded in existing platforms can lift upgrades, usage and subscription revenue, making “software eating AI” more likely than AI displacing incumbent applications.