iShares Tech-Software ETF Falls 23% YTD While Software Leaders Slump
iShares Tech-Software ETF has shed 23% year-to-date, including a 16% decline over the past month, underperforming a near-flat broader tech benchmark. Despite earnings beats from Salesforce, CrowdStrike, Unity Software and ServiceNow, each is down 26%, 21%, 59% and 29% respectively as AI agents threaten traditional software models.
1. ETF Underperformance
iShares Tech-Software ETF has lost 23% year-to-date, including a 16% drop in the past month, creating a stark contrast with broader tech indexes that remain essentially flat.
2. Holdings’ Earnings Beats
Key components—Salesforce, CrowdStrike, Unity Software and ServiceNow—each surpassed EPS and revenue targets, yet their stocks have declined 26%, 21%, 59% and 29% year-to-date, respectively.
3. AI Integration Threat
Advanced AI agents are now embedded directly into enterprise systems, executing tasks previously billed by software vendors and calling into question the sustainability of traditional licensing and service models.
4. ServiceNow CEO Pushback
ServiceNow CEO Bill McDermott challenged the narrative that AI will decimate software firms, projecting that enterprise AI deployments will drive a multitrillion-dollar investment super cycle in infrastructure.