IGV ETF Falls 20% as Forward P/E Collapses to Lowest Since 2014
The iShares Expanded Tech-Software Sector ETF dropped nearly 20% last week, extending total losses to over 30% since late-October highs as investors exit AI-exposed software names. Goldman Sachs notes the ETF’s forward P/E collapsed from 35x to about 20x, its lowest level since 2014.
1. Sharp Decline in IGV Performance
The iShares Expanded Tech-Software Sector ETF plunged almost 20% over the past week and has shed over 30% since its late-October peak as broad investor sentiment turned against high-growth software stocks.
2. Valuation Metrics Hit Multi-Year Lows
Forward price-to-earnings for the ETF collapsed from roughly 35x in late 2025 to about 20x, the lowest absolute level since 2014 and representing the slimmest premium versus the S&P 500 since 2010.
3. Capital Rotation Toward Value and Cyclicals
Investors are reallocating funds into value-linked and cyclical sectors, driving a 7% weekly surge in value factor indices and a 13% jump in industrial-cycle baskets, while software exposure has been slashed by hedge and mutual funds.
4. Outlook for Software Holdings
While broad software names face downward pressure, select vertical software firms and those with proprietary data edges may remain resilient, but near-term earnings stability will be key to any recovery in the ETF’s valuation.