Enterprise software stocks began the year with a brutal selloff, suffering their worst quarter since the Lehman Brothers collapse in 2008. The sector, as tracked by the iShares Expanded Tech-Software Sector ETF (CBOE: IGV) — was down almost 25%, and ServiceNow, Inc. (NYSE:NOW) had slumped 32%.

The losses deepened into April, with both IGV and ServiceNow hitting 2026 lows in the second week. The consensus was settled: AI would disrupt software and grind down the sector's earnings for years.

Less than two months later, the story has reversed.

IGV is now up 3.3% year-to-date, erasing the entire drawdown. The sector has climbed 15% in three days, its best three-day run on record. And ServiceNow has posted a rally of nearly 40% in four sessions, the strongest in the stock's history.

The disruption thesis didn't just stall. It inverted.

Why Did Wall Street's Least-Loved Corner Become The Market Leader?

Enterprise software is the plumbing companies run their operations on, the systems that route IT tickets, track sales, manage employees and move data between applications.

The fear of 2026 was that AI agents ...