Software Sector Sees 2012-Low Mutual Fund Weight, Driving 25%-30% Salesforce Drop
CRM•Mutual funds hold their lowest software-sector weight since 2012 while semiconductor allocations hit decade highs, driving 25%-30% YTD drops in Salesforce, Adobe and ServiceNow. Enterprise software revenue growth slowed through 2025 as customers delayed purchases over AI disruption fears and Salesforce’s upcoming earnings will test SaaS demand resilience.
1. Mutual Fund Software Exposure Hits Decade Low
Mutual funds entered Q2 with their smallest allocation to software stocks since 2012, excluding megacaps, while the sector underweight contrasts with record-high semiconductor weighting in long portfolios.
2. Hedge Funds Pivot to Semiconductors
Hedge funds increased positions in semiconductor names including Lam Research, Applied Materials and ASML, and mutual funds added Intel and SiTime, reflecting a shift from software to chipmakers.
3. AI Disruption and Revenue Slowdown Impact Software
The S&P Software & Services Index has fallen 12% year to date, with Salesforce, Adobe and ServiceNow each down 25%-30% as AI disruption fears mount and enterprise clients delayed software purchases in 2025.
4. Salesforce Earnings as Sector Litmus Test
Salesforce’s upcoming earnings release will provide insight into whether SaaS demand can withstand AI-driven market skepticism and validate the sector’s valuation re-rating.
