The “SaaSpocalypse,” a significant downturn that began in February 2026 and saw a 24% drop in the iShares Expanded Tech-Software Sector ETF (IGV) during the first quarter, has officially ended. By September, the fund rebounded dramatically, gaining over 40% from its April lows. This period of instability was precipitated by fears that advanced AI coding tools would disrupt traditional software models, causing a loss of $1 trillion in market capitalization for software stocks.
Key companies like Salesforce and ServiceNow reported solid earnings, helping shift investor sentiment. Salesforce’s revenue grew by 11% in Q2 of fiscal 2027, while ServiceNow surpassed earnings expectations. As a result, investors now see AI as a potential tailwind for software firms, complicating the investment landscape but making exchange-traded funds (ETFs) an appealing option for diversified exposure.
Investors looking to capitalize on this recovery can consider ETFs such as the iShares Expanded Tech-Software Sector ETF (IGV), which has $14.11 billion in net assets and has rallied 21.5% over the past three months, as well as the Invesco AI and Next Gen Software ETF (IGPT), which has a market value of $1.44 billion and gained 4.2% in the same period.
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