The iShares Expanded Tech-Software Sector ETF (IGV) has declined nearly 7% year-to-date, underperforming the broader tech complex as investor concerns over AI disruption intensified. Over the past twelve months, the fund is off by roughly 15%, marking its worst rolling annual return since 2018. Trading volume spiked 30% on days when leading software names reported earnings below analyst estimates, signaling heightened volatility for the group.

Investor fear has centered on the potential for next-generation AI agents to erode entrenched software revenue streams. Research firm IDC forecasts that AI-driven process automation could replace up to 20% of current enterprise software workloads by 2028. As a result, software stocks within IGV that trade at premium multiples—often exceeding 25 times forward earnings—have seen the sharpest declines, with several members sliding more than 25% since January.

Despite recent weakness, IGV’s portfolio now trades at an average price-to-sales ratio of 5.8, below its five-year median of 6.4. This discount presents a potential entry point for investors who believe AI integration will ultimately expand software demand rather than cannibalize it. Analysts covering the ETF note that at least 40% of its holdings generate recurring subscription revenue, which could shore up cash flows as companies adopt AI tools to boost productivity.