Enter your password
After weathering a difficult stretch since last autumn, software vendors have been rebounding over the past few weeks. The sector has recently been under pressure amid fears that new AI tools, notably Anthropic’s Claude Code and OpenAI’s Codex, would lower barriers to entry across the industry. However, these concerns have failed to materialize in Q1 earnings reports.
Justin Emerson
Published on 06/01/2026 at 02:21 pm EDT
The industry’s recovery began in May following better-than-expected results from heavyweights such as AppLovin, Constellation Software, ServiceNow, and cybersecurity giants. Salesforce also surprised to the upside last week, announcing a massive $25bn capital return to shareholders alongside its Q1 results.
The momentum appears to be accelerating this Monday following comments from Nvidia CEO Jensen Huang, who stated that it is “a great time to be a software company,” while noting that software “has to be presented to the [AI] agent in a way that the agent can use it.”
On the technical front, the IGV ETF recently formed an “inverse head and shoulders” pattern, which, in technical analysis parlance, suggests the start of a major bullish reversal. Since its mid-April low, the IGV ETF has gained as much as the SOX semiconductor index (+40%).
Valuations, however, remain starkly different: the software segment is trading at approximately 20x-21x forward earnings, two standard deviations below its 10-year average, while the semiconductor segment trades at 29x forward earnings, two standard deviations above its 10-year average.
Despite a rally of nearly 40% in two months, there appears to be significant potential for further re-rating in the software space. However, much will depend on the ability of these companies to prove that AI is an asset rather than a threat to their business models.
0 selected
Another reprieve for TikTok
June 18, 2025 at 08:57 am EDT
AppLovin clouded over because of Muddy Waters
Trader
This super rating is the result of a weighted average of the rankings based on the following ratings: Valuation (Composite), EPS Revisions (4 months), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
Investor
This super composite rating is the result of a weighted average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), EPS Revisions (1 year), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
Global
This composite rating is the result of an average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), Financial Estimates Revisions (Composite), Consensus (Composite) and Visibility (Composite). The company must be covered by at least 4 of these 5 ratings for the calculation to be carried out. We recommend that you carefully review the associated descriptions.
Quality
This composite rating is the result of an average of rankings based on the following ratings: Returns (Composite), Profitability (Composite) and Quality of Financial Reporting (Composite), and Financial Health (Composite). The company must be covered by at least 2 of these 3 ratings for the calculation to be performed. We recommend that you carefully read the associated descriptions.
ESG MSCI
The MSCI ESG score assesses a company’s environmental, social, and governance practices relative to its industry peers. Companies are rated from CCC (laggard) to AAA (leader). This rating helps investors incorporate sustainability risks and opportunities into their investment decisions.
Currency / Forex
Commodities
Cryptocurrencies
Interest Rates
Best financial
portal
More than 20 years
at your side
+ 1,300,000
members
Quick & easy
cancellation
Our Experts
are here for you
OUR EXPERTS ARE HERE FOR YOU
Monday – Friday 9am-12pm / 2pm-6pm GMT + 1
Select your edition
All financial news and data tailored to specific country editions
NORTH AMERICA
MIDDLE EAST
EUROPE
APAC
Leave a Reply