For much of the decade after the great financial crisis, the software trade was among the simplest and most profitable calls on Wall Street: buy scalable software franchises priced for high recurring growth.

Between the 2009 lows and the end of 2025, the iShares Expanded Tech‑Software ETF (NYSE:IGV) had climbed roughly 1,800%, nearly three times the 670% gain of the SPDR S&P 500 ETF Trust (NYSE:SPY).

Shares of major software names such as ServiceNow Inc. (NYSE:NOW), Oracle Corp. (NYSE:ORCL), AppLovin Corp. (NASDAQ:APP) and Adobe Inc. (NASDAQ:ADBE) have already fallen roughly 25% or more year to date, underscoring the severity of the sector's selloff.

That dominance made software equities a proxy for long‑duration growth in portfolios from venture capital to private equity.

Fast forward to 2026 and that narrative is under strain as AI threatens to disrupt the industry. Software stocks have already slid about 20% year‑to‑date while the broader market has largely flattened.

The shift is rooted in the rapid rise of AI tools that dramatically lower the cost and complexity of building software functions once outsourced to expensive vendors

Heavy selling in tech and software sectors has raised a simple question among allocators: Is ...