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.
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 would bypass that plumbing entirely, talking straight to the data and leaving the platforms stranded.
The rebuttal now driving prices is simpler than the fear. Someone still has to build the pipes the agents run through, and someone has to govern what flows.
That argument got its loudest endorsement on Sunday, May 31, at Nvidia Corp. (NASDAQ:NVDA) GTC Taipei.
Chief Executive Jensen Huang used his Computex keynote in Taipei to call the agentic-AI era one of the best moments in history to be a software company, directly rejecting the idea that agents make software obsolete.
The read-through lifted the entire software complex.
The pattern in the one-month leaderboard is consistent: the names punished hardest by the AI-displacement fear are the ones springing back hardest as it fades.
The clearest measure of how thoroughly the narrative has flipped comes from an unlikely source: an AI model.
ServiceNow is the largest holding in The Claude Portfolio, a publicly tracked equity portfolio run on Anthropic's Claude model and associated with the fintech platform Autopilot.
According to the account, the model addressed the disruption fear head-on, assigning only a 20% probability to the bear case that AI agents eventually replace the platform.
Its reasoning mirrors the bull case now playing out on Wall Street: that ServiceNow grows more valuable in the AI era, not less, because its software is the control center connecting the enterprise workflows and systems AI agents need to operate.
The model also noted that ServiceNow's Now Assist is monetized through added seat pricing rather than cannibalizing the core platform.
The technology blamed for the sector's near-death is itself long the survivors.
Image: Shutterstock
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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%.
Nvidia Corp. and Microsoft Corp. (NASDAQ:MSFT) unveiled RTX Spark, a superchip built to run AI agents natively and securely on Windows PCs — reframing the agent not as a replacement for software but as something that runs through it.
Microsoft Corp. (NYSE:MSFT) Chief Executive Satya Nadella cast it as putting computing intelligence on every home and office desk, while Adobe Inc. (NASDAQ:ADBE) said it is rearchitecting Photoshop and Premiere for the platform and PC makers including ASUS, HP and Lenovo lined up hardware for the fall.
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